THE  GIFT  OF 

MAY  TREAT  MORRISON 

IN  MEMORY  OF 

ALEXANDER  F  MORRISON 


BOSSISM   AND   MONOPOLY 


BO  SSI  SM 


AND 


MONOPOLY 


BY 


THOMAS    CARL    SPELLING 

AUTHOR   OF    "trusts   AND    MONOPOLIES,"    "LAW   OF 

PRIVATE   CORPORATIONS,"    "NEW   TRIAL 

APPELLATE    PRACTICE,"    ETC. 


D.   APPLETON   AND    COMPANY 

NEW   YORK 

1906 


Copyright,  1905,  by 
D.  APPLETON  AND  COMPANY 


Puhlishtd  December,  1905. 


S7n 


PREFACE 


By  earlier  association  and  education,  and  later  by 
professional  environment  and  interest,  the  author  in- 
clined strongly  to  ultraconservatism.  He  sternly  re- 
jected all  suggestions  that  there  could  exist  in  this 
country  such  industrial  combinations  as  could  not  be 
controlled  by  competition,  or  such  monopolies  in  trans- 
portation as  could  not  be  controlled  by  State  regulation. 
He  chose  to  be  satisfied  with  existing  economic  conditions 
and  tendencies,  and  accepted  as  practical  only  such 
changes  as  appeared  to  evolve  automatically  in  the 
progress  of  civilization.  And  yet,  being  of  an  investi- 
gating turn  of  mind  and  a  student  of  economics  and 
politics,  he  began  an  earnest  study  of  the  most  serious 
problems  of  the  time,  as  well  as  of  the  remedies  and 
palliatives  proposed.  As  a  result,  he  is  finally  convinced 
(1)  that  the  dangers  to  republican  institutions  sug- 
gested by  the  radicals  are  real  and  imminent;  and  (2) 
that  far-reaching,  or  what  may  be  termed  radical,  reme- 
dies are  necessary  to  arrest  evil  tendencies  and  restore 
to  the  people  equality  of  opportunity. 

A  restoration  of  the  property  values  of  which  the 
general  public  have  been  unjustly  deprived  cannot  be 
brought  about  in  the  present  generation.  That  must 
be  left  to  the  great  leveler,  time.  The  results  of  the 
author's  examination  of  concurrent  events  and  accessible 
facts  to  prove  the  premises,  and  his  arguments  in  advo- 
cacy of  adequate  remedies  are  set  forth  in  the  following 
pages. 

V 

432982 


PREFACE 

Our  governments  assume  gratuitously  responsibili- 
ties which  no  solvent  insurance  company  or  any  sane 
business  man  would  assume  for  pay.  The  laws  as  in- 
terpreted by  the  courts  require  the  patrons  of  public- 
service  corporations  to  provide  funds  to  cover  not  only 
losses  resulting  from  natural  deterioration  but  to  make 
repairs  and  improvements,  thus  keeping  up  the  prin- 
cipal equal  to  the  demands  of  public  service,  all  taken 
out  as  operating  expenses ;  also  to  insure  a  profit  from 
the  business.  Imperceptibly  this  vicious  form  of  pater- 
nalism has  been  given  conclusive  legal  sanction  and 
status,  paternalism  under  which  the  strong  are  fed  and 
the  weak  starved.  It  constitutes  of  itself  a  special 
privilege  of  priceless  value,  and  is  therefore  undemo- 
cratic and  destructive. 

It  is  impossible  to  calculate  to  what  extent  the  wealth 
of  the  nation  has  been  sequestered  into  the  hands  of  the 
holders  of  stocks  and  bonds  of  public-service  corporations 
• — municipal.  State,  and  interstate — under  the  operation 
of  this  false  economic  theory.  But  we  know  that  public- 
service  corporations  now  receive  the  equivalent  of  aver- 
age business  profit  on  nearly  thirty  billions  of  the  esti- 
mated one  hundred  billions  of  the  nation's  wealth,  that 
the  proportion  which  they  receive  has  been  constantly 
increasing,  and  that  these  great  interests  have  by  recent 
combinations  tightened  their  monopolistic  grip  and  ac- 
quired power  to  accelerate  the  accretion  and  raise  indefi- 
nitely their  percentage  of  aggregate  wealth. 

The  hopelessness  of  ever  getting  rid  of  admitted 
evils  without  a  change  in  our  political  methods  becomes 
more  clearly  apparent  the  more  one  studies  to-day's 
interstate-transportation  and  local  municipal-service 
problems.  Therefore,  the  bringing  about  of  a  change 
of  methods,  and  a  modification  of  that  idealistic  relation 
which  the  best  citizens  imagine  they  hold  to  those  vague 
entities  called  parties,  appears  to  be  the  first,  in  fact  the 

vi 


PREFACE 

principal,  task.  The  whole  question  rests  with  the  elec- 
torate. But  the  general  body  of  voters  are  led  by  cer- 
tain men  whom  they  know  as  party  leaders,  who  in  fact 
are  party  tyrants,  otherwise  known  as  bosses.  And  when 
you  have  found  the  party  boss,  if  you  will  carefully 
search  the  background  you  will  find  his  political  twin 
brother,  the  monopolist.  No  proper  indictment  can  be 
dra^vTi  against  the  one  which  does  not  include  the  other, 
nor  can  the  monopoly  be  overthrown  without  at  the 
same  time  unhorsing  the  boss.  Of  course,  if  the  monopo- 
lists and  bosses  deign  to  notice  this  production  at  all, 
they  will  denounce  it,  as  they  do  all  attempts  to  dis- 
lodge ill-gotten  power,  as  "  rank  socialism."  We  may 
safely  concede  that  the  remedy  herein  offered  is  a  step, 
or  a  tendency,  toward  the  end  kept  in  view  by  socialists ; 
but  even  so,  that  constitutes  no  valid  objection  to  any 
needed  reform.  One  would  be  foolish  to  refrain  from 
ever  taking  a  bath  lest  he  catch  cold  or  drown.  It  would 
be  idiotic  for  a  people,  individually  or  collectively,  to 
forever  deny  themselves  what  they  desire  and  really 
require,  merely  because  it  resembles,  or  reminds  them 
of,  something  which  they  do  not  want. 

In  none  of  the  many  volumes,  or  thousands  of 
speeches  and  articles  contributed  to  newspapers  and 
magazines,  on  the  "  trust "  question  has  its  true  legal 
status  been  explained.  It  is  truly  stated  in  the  opening 
chapter,  though  only  incidentally  involved  in  the  dis- 
course. The  motives  of  political  parties  for  withholding 
from  the  public  a  true  statement,  and  their  failure  to 
propose  an  effective  remedy,  are  not  entirely  clear. 

The  purpose  of  this  book  is  not  to  humiliate  Ameri- 
cans by  pointing  out  their  lack  of  public  spirit  and  need 
for  a  moral  awakening  in  all  that  pertains  to  govern- 
ment, but  is  rather  to  state  boldly  and  without  an  at- 
tempt at  concealment  true  conditions  as  the  author  sees 
them.     It  is  better  to  know  the  worst  and  to  apply  the 

vii 


PREFACE 

remedy   than   to   go    straight   to   destruction   under   a 
delusion. 

This  book  wars  against  some  accepted  conditions 
and  preconceptions.  Therefore,  it  is  to  a  degree  argu- 
mentative. It  appeals  in  small  degree  to  the  imagina- 
tion, but  largely  to  reason.  In  establishing  premises, 
the  utterances  of  well-known  authors,  publicists,  and 
statesmen  are  freely  used.  Whatever  the  reception 
accorded  his  views,  the  author  is  thorouglily  convinced 
of  their  correctness. 

T.  C.  S. 

November,  1905. 


Vlll 


CONTENTS 


CHAPTER  PAGE 

I. — General  monopoly  and  "trust"  situation  elucidated — 

Deceptions  exposed  and  delusions  dispelled      .         .         1 
II. — Partnership  between  party  bossisra  and  monopoly  .         .       29 
III. — Popular  apathy,  and  duty  of  the  people  herein — A  plea 

for  radical  action       .......       53 

IV. — Views   on  party  fealty — How  to  overthrow  party  bosses       78 
V. — Abuses  of  privilege  by  municipal-service  monopoUes  and 

their  political  annexes,  the  party  bosses   ...       85 

1.  How  the  people  divide  into  parties  and  are  led  and 

pillaged  by  corrupt  party  leaders. 

2.  Acceptance  of  false  standards  for  rate-fbdng  pur- 

poses. 

3.  Instances  of  overcapitalization  and  high  rates. 

4.  Swindling  through  false  meters. 

5.  Workings  of  the  boss  monopoly  regime  in  particular 

cities. 

6.  Gigantic   absorption   contemplated  by  the  North 

American  Company. 
VI. — Advantages   of   municipal  ownership — Objections   con- 
sidered       117 

VII. — Evils  of,  and  abuses  by,  railroads  in  private  hands — Natu- 
ral monopolies  and  basis  for  combination  stronger 
than  the   Government — "The  Kingdom  of  High 

Finance  " 137 

VIII. — Evils  and  abuses   by  railroads  in  private  hands — Con- 
trol of  legislation  and  political  interference      .         .167 
IX. — Evils  of,   and  abuses  by,  railroads   in  private  hands — 
Unreasonably  high  rates,  herein,  of  fraudulent  and 
inflated  issues  of  securities,  commonly  known  as 

"overcapitalization" 178 

ix 


CONTENTS 

CHAPTER  PAGE 

X. — Evils  of,  and   abuses  by,  railroads  in  private  hands — 
Largely  responsible  for  stock  speculations,  panics, 
and  financial  disturbances         .....     205 

XL — Evils    of,  and  abuses  by,  railroads  in  private  hands — 
Discriminations  by  which  individuals  are  ruined  and 
industrial  monopolies  created  and  maintained  .         .     230 
XIL — Evils   of,   and  abuses  by,  railroads  in  private  hands — 
Dangers  to  employees  and  passengers,  and  discom- 
forts of  travel  .....        i.         .         .     260 

XIIL — Evils  of,  and  abuses  by,  railroads  in  private  hands — As 

source  of  social  disorder  and  national  danger  .         .     267 
XIV. — Remedies  and  proposed  remedies — Futility  of  attempts 

at  rate  regulation      .         .         .         .         .         .         .271 

XV. — Remedies  and  proposed  remedies — Views  of  others         .     293 
XVL — Constitutionality,  feasibility,  and  advantages  of  govern- 
ment ownership — Objections  answered    .         .        .312 
Index 347 


BOSSISM  AND  MONOPOLY 


"  You  can  fool  part  of  the  people  all  the  time ;  you  can  fool  all 
the  people  part  of  the  time ;  but  you  can't  fool  all  the  people  all  the 
time. " — Lincoln. 


CHAPTER    I 

GENERAL  MONOPOLY  AND  "  TRUST  "  SITUATION  ELUCI- 
DATED  DECEPTIONS  EXPOSED  AND  DELUSIONS  DIS- 
PELLED 

There  is  no  law  of  Congress  or  of  any  State 
against,  nor  are  there  any  positive  common-law  rules 
inimical  to,  mere  monopoly.  The  courts  have  for  over 
a  century  recognized  monopolies  as  economic  or  indus- 
trial evils,  but  have  never  had  any  repressive  powers, 
except  when  monopoly  resulted  from  a  restrictive  agree- 
ment between  two  or  more  individuals.  Against  such 
arrangements  a  rule  of  public  policy,  a  sort  of  judicial 
fiction,  was  invoked. 

To  illustrate:  Two  or  more  men  may  buy  or  lease 
every  acre  of  pine  timber  in  the  world,  and  thus  make 
every  inhabitant  of  the  earth  as  dependant  upon  them 
for  pine  lumber  as  upon  change  of  seasons  for  crops ; 
and  yet,  so  long  as  no  agreement  is  made  between  them 
the  direct  effect  of  which  is  to  curtail  the  contractual 
freedom  of  any  individual,  no  court  anywhere,  so  far 
as  known,  would  have  power  to  interfere  with  them  or 
deprive  them  of  any  benefit  arising  from  their  monop- 

1 


BOSSISM    AND    MONOPOLY 

oly.  So  ihsit  the  oxily  derisions  by  our  courts,  State  or 
Federal,  to  be  found;  whether  based  on  common  law  or 
statutes,  wl'Jel'ftby  Tne'n  or  corporations  have  been  held 
liable,  either'  to' be"  ehj'oinedj  mulcted  in  damages,  or 
criminally  punished,  are  based  upon  agreements,  ex- 
press, or  arising  by  implication  from  their  conduct,  in 
restraint  of  trade. 

Owing  to  the  peculiarities  of  our  Federal  Constitu- 
tion and  of  the  partition  of  powers  between  State  and 
Federal  governments,  and  also  owing  to  the  liberality 
of  certain  State  legislation,  there  are  ways  for  creating 
and  maintaining  monopolies  of  all  kinds  for  which  no 
judicial  remedy  can  be  found. 

In  1890  an  act  was  passed  by  Congress  on  the  sub- 
ject of  contracts  or  agreements  in  restraint  of  inter- 
state commerce,  intended  to  reach  certain  combinations 
formed  by  agreements  between  men  and  between  corpo- 
rations, called  "  trust  "  agreements.  There  have  been 
few  such  agreements  in  a  form  to  be  dealt  with  under 
that  act,  because  as  soon  as  it  was  passed,  those  desir- 
ing to  monopolize  or  restrict  interstate  commerce  found 
other  methods  for  doing  so  than  by  making  such  agree- 
ments. It  is  doubtful  if  there  is  to-day  a  single  insti- 
tution or  business  arrangement  within  the  inhibitions  of 
that  act,  notwithstanding  that  trade,  transportation, 
and  manufacturing  monopolies  are  more  numerous  and 
powerful  than  ever  before.  What  is  called  the  "  Beef 
Trust  "  is  not  a  trust  at  all,  but  rather  a  "  pool."  It 
is  a  secret  pool,  difficult  or  impossible  to  be  suppressed, 
or  even  hindered,  by  judicial  remedies  or  proceedings, 
but  it  is  not  a  trust. 

The  term  "  trust  "  has  a  much  wider  legal  meaning 
than  as  used  in  this  connection.  It  arises  from  contract, 
also  by  operation  of  law,  in  all  cases  where  one  indi- 
vidual or  corporation  holds  the  legal  title  to  property 
and  another  enjoys,  or  is  to  enjoy  in  the  future,  the 

2 


DELUSIONS    AND    DECEPTIONS 

beneficial  interest.  A  "  trust "  whereby  a  monopoly 
was  created  consisted  in  the  transfer  of  stocks  of  sev- 
eral corporations  to  individuals,  called  trustees,  or  to  a 
corporation,  the  legal  title  to  be  held  by  such  trustees 
or  corporation,  while  the  persons  making  the  transfers 
in  trust  received  the  dividends  or  otherwise  enjoyed  the 
beneficial  interest.  During  the  presidential  campaign 
of  1900  Senator  Hanna  stated  that  there  were  no  trusts, 
meaning  no  doubt  that  there  were  no  monopolies  the 
subject  of  popular  complaint  in  the  form  of  a  trust. 
Nearly  every  Democratic  voter  in  the  country  took  liim 
severely  to  task  for  that  utterance  and  made  it  the  sub- 
ject of  much  ridicule.  And  yet  the  Senator  told  the 
truth.  Whether  the  fact  was  ascertained  by  himself 
or  the  information  was  imparted  to  him  by  some  law- 
yer is  immaterial.  The  form  of  combination  above 
described  was  adopted  in  the  eighties  by  a  few  great 
interests,  notably  the  Standard  Oil,  the  North  River 
Sugar  Refineries,  and  the  Distilling  and  Catde  Feeding 
Company.  But  such  combinations  were  so  obviously  re- 
strictive of  trade,  evfen  under  the  common-law  test,  that 
they  could  be,  and  were,  some  previously  and  others  sub- 
sequently, reached  and  dissolved  through  State  courts. 

The  people  were  long  ago  entitled  to  have  explained 
to  them  the  true  intent  and  meaning  of  the  decisions  in 
the  "  trust  "  cases.  But  instead  of  clearly  stating  the 
situation,  the  successive  heads  of  the  law  department  of 
the  Federal  Government,  from  Olney  to  Moody,  have 
indulged  in  vague  expressions  and  mystifications.  For 
instance,  when  the  appeal  in  the  "  Beef  Trust"  injunc- 
tion case  was  decided  by  the  Supreme  Court,  Mr.  Moody, 
in  an  official  interview,  said: 

"  The  opinion  sustains  in  all  respects  the  contentions 
of  the  Goverament.  It  makes  it  clear  that  all  combina- 
tions between  independent  individuals,  partnerships,  or 
corporations  engaged  in  interstate  commerce,  by  which 

3 


BOSS  ISM    AND    MONOPOLY 

competition  between  them  in  such  commerce  is  sup- 
pressed, fall  under  the  prohibition  of  the  so-called  Anti- 
Trust  act." 

This  was  translated  by  the  press — whether  inten- 
tionally or  not,  of  course,  cannot  be  stated — to  be  a 
menace  to  all  industrial  monopoHes,  such,  for  instance, 
as  the  "  Sugar  Trust,"  the  "  Standard  Oil  Trust,"  etc. 
But  it  will  be  noted  that  Mr.  Moody  was  cautious  in 
his  statement,  only  declaring  the  decision  to  be  appli- 
cable to  combinations  "  between  independent  individuals, 
partnerships,  or  corporations  engaged  in  interstate  com- 
merce, by  which  competition  between  them  in  such  com- 
merce is  suppressed."  He  should  have  added  something 
like  this :  "  But  whatever  the  intentions  of  individuals 
who  come  together  and  form  a  corporation  under  the 
laws  of  any  State,  the  Anti-Trust  law  does  not  reach 
them  unless  they  express  an  intention  to  monopolize  in- 
terstate commerce  in  their  constating  agreements;  there- 
fore the  decision  offers  no  relief  with  reference  to  the 
other  industrial  monopolies  of  which  there  is  general 
complaint." 

He  might  truthfully  have  gone  further  and  stated 
that  the  decision  was  worthless  even  as  to  the  "  Beef 
Trust,"  for  the  reason  that  the  court  struck  out  the 
sweeping  clause  of  the  injunction  and  left  the  packers 
free  to  adopt  any  new  devices  they  could  invent  for  an 
evasion  of  the  law.     And  this  they  have  done. 

To  see  the  futility  of  any  of  the  moderate  remedies 
which  have  been  proposed,  and  the  necessity  for  a  radi- 
cal, far-reaching  measure,  such  as  will  require  an  amend- 
ment to  the  Federal  Constitution  and  legislation  pur- 
suant thereto,  and  probably  government  ownership  of 
transportation  in  addition,  it  is  only  necessary  to  con- 
sider the  evolution  of  the  great  corporations,  now 
designated  as  "  trusts."  In  all  the  great  lines  of  manu- 
facturing, as  well  as  in  production  of  materials  to  be  used 

4 


DELUSIONS    AND    DECEPTIONS 

in  further  manufacturing,  as  of  finished  products,  there 
had  been  great  demoralization,  loss  of  profits,  and  fail- 
ures during  the  period  preceding  the  organization  of 
such  combinations  as  the  North  River  Sugar  Refining 
Company  of  New  York  and  the  Standard  Oil  Company 
of  Ohio,  both  dissolved  by  decrees  of  the  courts  of  these 
States.  Many  attempts  by  manufacturers  to  limit  pro- 
duction and  control  prices  by  pooling  arrangements, 
such  as  the  railroads  had  resorted  to,  were  attempted, 
and,  as  a  rule,  had  failed,  leaving  matters  in  a  worse 
state  than  before.  The  common-law  inhibitions  were 
sufficient  to  have  undone  the  loosely  organized  trusts, 
even  without  the  statutes  directed  against  them.  But 
in  1889,  and  subsequently,  a  majority  of  the  States, 
both  by  constitutional  amendment  and  statute,  declared 
uncompromisingly  against  all  combinations  and  contracts 
In  restraint  of  trade.  In  1890  the  Sherman  Anti-Trust 
law  was  passed  by  Congress.  It  was  impossible  that  the 
trusts  as  then  formed  should  survive  in  so  hostile  an 
atmosphere. 

Prior  to  1889  no  State  had  ever  by  general  law 
conferred  upon  corporations  the  power  to  purchase  and 
hold,  for  purposes  of  voting  and  thus  securing  control, 
the  stocks  of  other  corporations.  And  the  courts  had 
uniformly  denied  to  them  such  po^er  as  a  common-law 
right.  After  the  stringent  State  and  Federal  anti-trust 
legislation  of  the  period  just  spoken  of  had  made  it 
impossible  for  the  trust  to  obtain  a  legal  footing,  one 
State — New  Jersey — was  found  willing  to  do  that  which 
hitherto  it  had  been  found  impossible  to  have  done  in  any 
State.  In  1889  its  incorporation  law  was  so  revised  as 
to  include  among  the  lawful  purposes  of  incorporation 
the  right  to  purchase  the  stock  of  any  company  or  com- 
panies owning,  mining,  manufacturing,  or  producing 
materials  or  other  property  necessary  for  their  business, 
and  to  issue  stock  in  payment  therefor.     In  1893  the 

5 


BOSSISM    AND    MONOPOLY 

scope  of  the  New  Jersey  statute  was  further  enlarged 
to  read  as  follows :  "  Any  corporation  may  purchase, 
hold,  sell,  assign,  transfer,  mortgage,  pledge,  or  other- 
wise dispose  of  the  shares  of  the  capital  stock  of,  or  any 
bonds,  securities,  or  other  evidences  of  indebtedness  cre- 
ated by,  any  other  corporation  or  coi'porations  of  this 
or  any  other  State,  and  while  owner  of  said  stock  may 
exercise  all  the  rights,  powers,  and  privileges  of  owner- 
ship, including  the  right  to  vote  thereon." 

Under  this  statute  three  or  more  men  may  form  a 
corporation,  and  through  it  do,  anywhere  in  the  world, 
any  and  all  business  that  any  and  all  corporations 
formed  in  that  or  any  other  State  may  lawfully  do, 
provided  that  in  its  organization  it  violates  no  New  Jer- 
sey law  and  complies  with  certain  easy  requirements  of 
the  New  Jersey  incorporation  laws.  This  statute  had 
important  and  far-reaching  consequences.  Many  other 
States  had  enacted  strict  "  anti-trust  "  laws,  but  a  cor- 
poration in  any  State  could  nullify  the  restrictive  laws 
of  such  States  by  merely  transferring  a  controlling  in- 
terest in  its  stock  to  a  corporation  formed  in  New  Jer- 
sey. So  corporations  in  different  States  engaged  in 
any  line  of  manufacturing — sugar,  steel,  petroleum, 
leather  goods,  tobacco,  etc. — could  come  to  an  agreement 
in  New  York  City  or  anywhere,  and  then  have  three  or 
more  office  clerks  incorporate  in  New  Jersey  a  million 
or  a  billion-dollar  company.  Then  all  they  had  to  do 
in  order  to  obtain  complete  immunity  from  the  Federal, 
as  well  as  from  all  State,  "  anti-trust  "  laws,  was  to  have 
transferred  to  the  new  corporation  a  controlling  interest 
of  the  combining  companies.  This  done,  a  legal  status 
was  given  to  the  combination,  however  restrictive  of 
State  and  interstate  trade,  however  monopolistic  in  its 
design  and  power. 

It  has  often  been  asserted  that  the  policy  of  New 
Jersey   in    thus    amending  her   incorporation    laws    was 

6 


DELUSIONS    AND    DECEPTIONS 

vicious  and  discreditable  to  a  sovereigTi  State.  But  if 
it  was,  the  same  discredit  attaches  to  Delaware,  West 
Virginia,  Maine,  New  York,  South  Dakota,  Nevada, 
and  Oklahoma  for  following  her  example.  The  incor- 
porated trusts  and  other  large  corporations  having  their 
origin  in  New  Jersey  cannot  be  prevented,  either  by 
Federal  or  State  authority,  from  doing  business  in  any 
part  of  the  country  where  they  find  it  profitable.  No 
other  courts  have  jurisdiction  of  proceedings  against 
corporations  to  forfeit  their  charters  or  to  restrain  them 
from  usurping  franchises  or  powers  other  than  those  of 
the  States  granting  the  charters,  and,  as  we  have  seen, 
the  laws  of  New  Jersey,  and  of  the  other  States  men- 
tioned here,  protect  them  from  such  proceedings  in  their 
home  courts. 

Now,  by  reference  to  a  few  Supreme  Court  decisions, 
the  narrowness  of  the  power  of  Congress  to  legislate,  and 
the  narrow  limits  within  which  the  Sherman  act  is  opera- 
tive, will  be  seen. 

In  United  States  vs.  Knight  (156  U.  S.  Rep.,  1), 
also  in  the  late  case  of  Anderson  zrs.  United  States  (171 
U.  S.  Rep.,  604),  the  Court  said  that  when  it  is  seen 
that  the  agreement  entered  into  does  not  directly  relate 
to,  act  upon,  and  embrace  interstate  commerce,  and  that 
it  was  executed  for  an  entirely  different  purpose,  and 
that  it  was  calculated  to  attain  it,  the  agreement  would 
be  upheld  if  its  effect  upon  interstate  commerce  were 
only  indirect  and  incidental.  In  the  Knight  case,  a  cor- 
poration had  been  formed  under  the  laws  of  a  State. 
The  organizers  of  it  represented  various  other  corpora- 
tions and  firms  engaged  in  the  refining  of  sugar  in  dif- 
ferent States.  The  properties  of  all  had  been  or  were 
immediately  transferred  to  this  newly  formed  corpora- 
tion, the  American  Sugar  Refining  Company,  whose 
purposes,  set  forth  in  its  articles,  were  the  manufacture 
and  sale  of  all  kinds  of  sugar.  The  Court  refused  to 
2  7 


BOSSISM    AND    MONOPOLY 

look  beyond  the  articles  to  discover  a  purpose  to  mo- 
nopolize interstate  commerce  in  sugar,  though,  as  a 
matter  of  fact,  the  corporation  thus  formed  controlled 
ninety-eight  per  cent  of  the  total  output,  and  is  to-day 
as  complete  a  monopoly  as  can  be  found.  The  Court 
also,  in  support  of  its  decision  adversely  to  the  Govern- 
ment, said,  in  substance,  that  Congress  could  not  concern 
itself  with  the  subject  of  manufacturing,  and  that  it 
should  not  consider  stock  deals  nor  the  proceedings  to 
create  corporations,  nor  their  powers  when  organized. 
This  line  of  delineation  between  what  is  and  what  is 
not  within  the  provisions  of  the  Sherman  act  is  also 
made  clear  in  the  Northern  Securities  case,  where  the 
decision  was  in  favor  of  the  Government,  the  Court 
saying :  "  What  the  Government  has  particularly  com- 
plained of — indeed,  all  that  it  complains  of  here — is 
the  existence  of  a  combination  among  the  stockholders 
of  competing  railroad  companies  which,  in  violation 
of  the  Act  of  Congress,  restrains  interstate  commerce 
through  the  agency  of  a  common  corporate  trustee 
designated  to  act  for  both  the  companies  in  repressing 
full  competition  between  them."  In  that  case  the  in- 
corporators were  a  majority  of  the  stockholders  in  cer- 
tain interstate  railroads,  the  corporation  formed  by  them 
being  merely  a  holding,  or  trustee  company,  and  it  was 
sufficiently  apparent  from  the  constating  agreements, 
including  the  articles,  that  the  principal  purpose  of  the 
Northern  Securities  Company  was  the  monopolization 
of  interstate  commerce  in  a  large  section  of  the  United 
States,  and  therefore  the  agreements  were  considered 
within,  and  made  the  company  so  formed  amenable  to, 
the  terms  of  the  Sherman  act.  But  it  seems  to  be  set- 
tled by  these  cases  that  the  mere  manufacture  and  sale 
of  a  commodity,  upon  however  extensive  a  scale,  and 
though  the  sales  are  largely  for  delivery  to  citizens  of 
other  States,  and  though  one  manufacturing  and  selling 

8 


DELUSIONS    AND    DECEPTIONS 

company  have  a  virtual  monopoly,  yet  that  does  not 
render  it  a  violation  of  the  provision  directed  at  those 
who  "  monopolize  or  attempt  to  monopolize  interstate 
commerce."  It  seems  that  to  constitute  a  violation  of 
the  statute  there  must  be  a  precedent  agreement  in 
restraint  of  interstate  trade,  and  that  no  amount  of 
actual  monopolization,  in  the  absence  of  such  agree- 
ment, will  constitute  persons  or  corporations  violators 
of  the  statute.  With  these  two  cases  before  us,  we  are 
the  better  able  to  understand  the  decision  in  Addyston 
Pipe  and  Steel  Company  vs.  United  States  (175  U.  S. 
Rep.,  211).  In  the  case  just  mentioned,  it  clearly  ap- 
peared that  the  six  defendant  corporations  were  manu- 
facturers for  sale  of  steel  pipe;  that  together  they 
produced  about  two-thirds  of  the  entire  production 
within  well-defined  boundaries,  specified  in  their  agree- 
ment, and  that  the  agreement,  as  it  was  afterwards 
carried  out,  was  effective  to  shut  out  competition  and 
maintain  prices  above  what  they  would  have  been  with- 
out the  agreement  and  cooperation  under  it.  Had  the 
stockholders  of  the  six  companies  combined  their  prop- 
erties and  formed  a  new  corporation,  taking  its  stock 
for  that  of  their  respective  companies,  with  only  the 
usually  specified  purposes  of  a  manufacturing  corpora- 
tion, they  might  just  as  effectually  have  monopolized 
the  business  without  violating  the  Shennan  act.  The 
case  would  then  have  been  "  on  all  fours "  with  the 
Knight  case.  But  the  Addyston  case  disclosed  a  com- 
bination in  the  nature  of  a  pooling  agreement  instead 
of  a  corporation.  The  arrangement  between  various 
packing  companies  came  under  the  ban  of  the  law  for 
similar  reasons. 

We  may  obtain  a  clearer  view  of  the  theory  and 
working  of  the  Sherman  Anti-Trust  Act  if  we  watch 
the  progress  and  evolution  of  the  beef  business  in  this 
country.     We  will  suppose  that  many  years  ago  four 

9 


BOSS  ISM    AND    MONOPOLY 

butchers  supplied  the  town  of  Chicago  with  fresh  meat. 
Being  injured  by  each  other's  competition,  they  agreed 
to  pay  less  for  live  stock,  or  to  sell  for  a  higher  price, 
or  to  do  both.  That  is  a  contract  in  restraint  of  trade, 
but  to  be  dealt  with  by  State  authorities  exclusively. 
The  same  would  have  been  true  if  all  the  butchers  in 
the  State  of  Illinois,  or  even  all  in  the  United  States, 
had  been  parties  to  the  agreement,  so  long  as  the  trade 
of  the  combination  was  to  be  restricted  to  one  State. 
Let  us  suppose,  however,  that  our  four  butchers,  with- 
out any  such  agreement,  have  become  packers  and 
dealers  upon  a  colossal  scale,  have  each  taken  in  part- 
ners, and  finally  incorporated  with  large  capital  stock, 
each  company  having  branch  houses  in  various  cities  in 
other  States,  each  controlling  one-fourth  of  all  the 
slaughtering  and  packing  in  the  United  States.  We 
will  also  suppose  that  their  interests  outside  Chicago  do 
not  clash,  one  having  its  branch  house  in  Kansas  City, 
one  in  Omaha,  one  in  Fort  Worth,  and  the  other  in 
St.  Paul,  so  that  each  has  a  complete  monopoly  over  a 
large  territory.  Thus  far  there  are  four  monopolies, 
one  in  each  of  the  temtories  adjacent  to  the  respective 
branch  establishments.  Thus  far  neither  can  be  reached 
by  any  provision  of  the  Sherman  act  under  the  decisions, 
nor  for  that  matter  under  any  State  statute.  We  may 
go  still  further  without  running  counter  to  the  act. 
Suppose  the  majority  interests  in  each  and  all  of  the 
four  establishments  unite  in  the  formation  of  one  great 
corporation  under  the  laws,  we  will  say,  of  New  Jersey, 
and  transfer  to  it  all  their  properties  and  business, 
providing  for  a  principal  place  of  business  and  loca- 
tion of  their  central  plant  at  Chicago,  as  may  be  done 
under  the  New  Jersey  statutes.  If  their  articles  of 
incorporation  do  not  indicate  a  purpose  to  monopolize 
the  buying,  slaughtering,  packing,  and  disposal  of  the 
products  of  live  stock — as  there  would  be  no  advantage 

10 


DELUSIONS    AND    DECEPTIONS 

in  doing — they  are  still  immune  from  liability  accord- 
ing to  the  decision  in  the  Knight  case.  But  suppose, 
instead  of  taking  that  course,  they,  as  four  distinct  cor- 
porations, arrive  at  a  "  gentleman's  agreement,"  as 
separate  corporations,  not  to  bid  against  each  other,  to 
pool  profits,  to  maintain  prices,  to  coerce  rebates  and 
special  rates  from  the  railroads  (all  of  which,  it  was 
alleged,  they  did),  the  Sherman  act,  if  it  were  prac- 
ticable to  reach  and  deal  with  such  secret  understand- 
ings, would  be  effective  against  them. 

The  defect  of  power  on  the  part  of  Congress  is 
inherent  in  limitations  placed  by  the  courts  upon  the 
definition  of  the  term  "  interstate  commerce  "  as  used 
in  the  Constitution.  In  Kidd  vs.  Pearson  (128  U.  S. 
Rep.,  1-22)  the  Court  said:  "If  it  be  held  that  the 
term  includes  the  regulation  of  all  such  manufactures 
as  are  intended  to  be  the  subject  of  commercial  trans- 
actions in  the  future,  it  is  impossible  to  deny  that  it 
would  also  include  all  productive  industries  that  con- 
template the  same  thing.  The  result  would  be  that 
Congress  would  be  invested,  to  the  exclusion  of  the 
States,  with  the  power  to  regulate  not  only  manufac- 
tures, but  also  agriculture,  horticulture,  stock-raising, 
domestic  fisheries,  mining — in  short,  every  branch  of 
human  industry.  For  is  there  one  of  them  that  does 
not  contemplate,  more  or  less  clearly,  an  interstate  or 
foreign  market.''  "  In  Gibbons  vs.  Ogden  (9  Wheat.,  1, 
189,  210)  Chief  Justice  Marshall,  delivering  the  opin- 
ion, said:  "Commerce"  (referring  to  interstate  com- 
merce) "  undoubtedly  is  traffic,  but  it  is  something 
more — it  is  intercourse.  It  describes  the  commercial 
intercourse  between,  nations  and  parts  of  nations  in  all 
its  branches,  and  is  regulated  by  prescribing  rules  for 
carrying  on  that  intercourse."  And  so  the  court  in  the 
Knight  case  held  that  that  whicli  belongs  to  commerce 
within  this  sense  is  within  the  jurisdiction  of  the  United 

11 


BOSS  ISM    AND    MONOPOLY 

States,  but  that  that  which  does  not  belong  to  such  com- 
merce is  within  the  jurisdiction  of  the  pohce  power  of  the 
State.  And  further  along,  Chief  Justice  Fuller,  deliv- 
ering the  opinion  in  the  latter  case,  after  quoting  and 
discussing  Chief  Justice  Marshall's  definition,  said: 
"  The  fact  that  an  article  is  manufactured  for  export 
to  another  State  does  not  of  itself  make  it  an  article 
of  interstate  commerce,  and  the  intent  of  the  manufac- 
turer does  not  determine  the  time  when  the  article  or 
product  passes  from  the  control  of  the  State  and  belongs 
to  commerce."  Again,  in  Anderson  vs.  United  States 
(171  U.  S.  Rep.,  604),  it  was  held  that  whether  the 
members  of  a  traders'  live  stock  exchange  were  or  were 
not  engaged  in  the  business  of  interstate  commerce  was 
immaterial,  as  the  agreement  proved  was  not  in  restraint 
of  trade  and  did  not  regulate  such  commerce. 

Considering  all  these  decisions  and  limitations  upon 
the  meaning  of  interstate  commerce,  two  important 
propositions  are  beyond  the  pale  of  controversy.  First, 
the  Sherman  act  contains  the  full  measure  of  the  power 
of  Congress  under  the  Constitution  to  enjoin  and  pun- 
ish for  entering  into  and  carrying  out  contracts  restrict- 
ive of  trade,  and,  secondly,  that  none  of  the  great 
monopolies,  the  subject  of  interminable  newspaper  and 
political  comment,  such,  for  instance,  as  the  Standard 
Oil  Company,  the  American  Sugar  Refining  Company, 
and  a  score  of  others  that  could  be  mentioned,  can  be 
reached  under  the  terms  of  that  act,  or  under  any  act 
which  Congress  has  constitutional  power  to  enact. 

Now  what  becomes  of  Mr.  Bryan's  and  Mr.  Gar- 
field's license  plan?  It  is  evident  from  what  Mr.  Bryan 
says  in  an  article  recently  appearing  in  Public  Opinion^ 
that  in  order  to  make  it  effective  additional  powers  must 
be  exercised  by  Congress  in  the  form  of  new  and  more 
drastic  measures,  and  that  a  new  definition  of  monopoly 
must   be   interpolated   therein.      These,   we    think,    are 

12 


DELUSIONS   AND   DECEPTIONS 

shown  above  to  be  impossibilities  without  an  amendment 
of  the  Constitution.  As  evidence  that  Mr.  Bryan  con- 
templates the  necessity  for  an  extension  of  congressional 
interference,  and  assumes  that  such  corporations  as 
those  above  mentioned  shall  be  made  amenable  to  license 
duty  and  espionage  under  the  new  order  of  things,  we 
quote  from  his  article  as  follows :  "  But  the  Sherman 
law  does  not  cover  the  entire  field.  It  only  prohibits 
combinations  between  separate  and  distinct  corporations 
or  independent  concerns.  The  weakness  of  the  Sherman 
law  lies  in  the  fact  that  half-a-dozen  corporations,  if 
prosecuted  under  the  Sherman  law,  can  evade  future 
prosecutions  by  selling  all  of  the  plants  of  the  various 
separate  corporations  to  a  new  corporation  and  becom- 
ing the  managers  of  it.  The  Steel  Trust  has  done  this 
very  thing,  and,  so  far  as  the  Sherman  law  is  concerned, 
occupies  a  more  favorable  position  than  the  corporations 
engaged  in  the  meat-packing  business.  The  Sherman 
law  needs  to  be  amended  so  as  to  make  it  a  criminal 
offense  for  one  person  or  a  group  of  persons  who  attempt 
to  monopolize  any  product,  whether  the  persons  are  con- 
nected with  several  separate  corporations  or  are  stock- 
holders or  directors  of  a  single  corporation." 

A  constitutional  amendment  might,  of  course,  con- 
fer upon  Congress  greater  powers,  but  as  it  now  stands 
no  such  congressional  amendment  to  the  Sherman  act 
as  Mr.  Bryan  proposes  would  stand  the  ordeal  of  a 
review  by  the  Supreme  Court.  It  would  doubtless  be 
easier  to  secure  the  election  of  a  sufficient  number  of 
senators  and  representatives  to  institute  government 
ownership  of  the  means  of  transportation  requiring  no 
constitutional  amendment  than  to  secure  the  consent  of 
the  requisite  number  of  States  to  an  amendment  con- 
ferring upon  Congress  such  far-reaching  powers  over 
all  corporations  created  by  the  States,  as  he  suggests. 
There  are,  however,  some  legislative  schemes  which  in- 

13 


BOSS  ISM    AND    MONOPOLY 

volve  so  much  and  such  compHcated  legislative  machin- 
ery and  so  much  and  such  expensive  administration  and 
enforcement  as  to  render  them  totally  impracticable; 
and  the  license  system  appears  to  be  one  of  them.  An- 
other is  the  proposed  fixing  of  railroads'  rates  through 
a  commission,  the  roads  remaining  in  private  hands. 
The  futility  of  such  attempt  is  fully  shown  in  a  subse- 
quent chapter.  No  doubt  remains,  however,  of  the  con- 
stitutionality of  an  act  conferring  such  power,  owing 
to  the  public  functions  performed  by  the  railroads.  An 
extract  from  the  opinion  in  Kidd  vs.  Pearson  (before 
cited)  is  as  applicable  here  as  in  the  connection  there 
used :  "  The  demands  of  such  a  supervision  would 
require  not  uniform  legislation  generally  applicable 
throughout  the  United  States,  but  a  swarm  of  statutes 
only  locally  applicable  and  utterly  inconsistent.  A 
situation  more  paralyzing  to  the  State  governments, 
and  more  provocative  of  conflicts  between  the  General 
Government  and  the  States,  and  less  likely  to  have 
been  what  the  framers  of  the  Constitution  intended,  it 
would  be  difficult  to  imagine." 

The  license  plan  requires  consideration  of  the  pro- 
portion of  capital  stock  to  propert}'^  values  involving  a 
judicial  determination  of  values.  Inasmuch  as  most 
corporations  would  be  already  engaged  in  interstate 
commerce,  many  would  have  to  in  some  way  reduce  capi- 
tal stock,  and  that  could  not  be  done  without  compulsory 
rescission  of  contractual  obligations.  How  could  that 
be  done? 

No  better  definition  of  a  contract  or  combination  in 
restraint  of  trade  than  that  of  the  common  law  has  ever 
been  suggested,  and  a  corporation  would  not  come  within 
that  definition  merely  because  it  possessed  large  resources 
nor  even  because  it  did  a  larger  percentage  of  business 
than  all  others.  There  is  such  a  thing  as  a  practical 
monopoly  distinct  from  a  monopoly  in  the  illegal  or  re- 

14 


DELUSIONS    AND    DECEPTIONS 

strictive  sense.  A  monopoly  secured  by  buying  out,  or 
even  by  rendering  unprofitable  all  competition,  and 
thereby  suppressing  it,  could  not,  as  previously  ex- 
plained, be  hindered  or  interfered  with  under  the  com- 
mon law,  nor  under  any  State  law  in  force  anywhere, 
in  the  absence  of  a  restrictive  agreement  between  the 
surviving  and  defunct  establishments.  And  until  the 
power  to  create  corporations  is  taken  away  from  every 
State  in  the  Union  it  is  impossible  to  conceive  of  any 
limitation  upon  the  concentration  of  capital  in  a  single 
corporation. 

One  of  the  main  contentions  in  the  Knight  case,  and 
one  of  the  main  reasons  advanced  for  deciding  adversely 
to  the  Government,  was  that,  notwithstanding  the  show- 
ing that  the  American  Sugar  Refining  Company,  after 
the  combination,  controlled  ninety-eight  per  cent  of  the 
production  and  sale  of  refined  sugar  in  the  United 
States,  yet  it  did  not  necessarily  follow  that  it  had 
monopolized  that  trade,  because  the  field  was  still  open 
for  anyone  who  wished  to  enter. 

Now  a  few  words  with  reference  to  the  evil  of 
"  stock  watering,"  against  which  the  "  license  plan  "  is 
in  part  aimed. 

As  long  as  one  State  remains  with  corporation  laws 
similar  to  those  of  New  Jersey,  Delaware,  West  Vir- 
ginia, South  Dakota,  Nevada  (a  score  could  be  men- 
tioned) this  could  happen:  Ten  men,  each  in  a  separate 
State,  having  ten  million  dollars  invested  in  iron  and 
steel  production,  being  all  the  plants  in  the  country, 
conclude  to  incorporate  under  the  laws  of  (for  instance) 
Delaware,  each  to  take  for  his  plant  twenty  million 
dollars  of  stock,  the  new  company  to  carry  on  as  one 
institution  the  business  which  had  been  previously  done 
by  the  ten  men  separately.  If  one  can  buy  another 
out,  why  cannot  one  and  five  of  his  neighbors  incor- 
porate a  company   and  buv   him  out?      If  they   may, 

15 


BOSSISM    AND    MONOPOLY 

why  cannot  the  ten  iron  manufacturers  of  different 
States  form  the  company  and  then  all  sell  to  the  com- 
pany? And  if  they  might  sell  to  it  for  cash,  why  not 
for  stock?  And  if  so,  would  a  government  be  tolerated 
which  attempted  to  deprive  them  of  the  privilege  of 
agreeing  among  themselves  upon  the  stock  valuation  of 
their  respective  plants?  Really  no  one  is  injured  by 
the  issue  of  an  amount  of  stock  less  or  more  than  any 
other  amount,  since  no  one  is  under  the  slightest  compul- 
sion to  invest  a  dollar  in  it.  Here  we  have  an  illustra- 
tion of  an  actual  monopoly  with  its  stock  half  water, 
as  the  term  is  generally  understood,  with  no  statute  or 
common-law  principle  in  the  way  of  its  buying  the  raw 
material  of  iron  and  steel  manufactures  at  the  lowest 
cost  of  production  and  exacting  from  the  consuming 
public  the  utmost  penny  the  commodity  will  bear.  All 
of  what  are  now  known  as  industrial  trusts  have  been 
formed  and  are  now  operating  upon  the  foregoing  plan 
with  unimportant  modifications.  It  is  not  a  pleasant 
situation,  but  such  it  is. 

It  is  the  opinion  of  the  writer  that  there  are  no 
dangerous  or  oppressive  industrial  monopolies  that  could 
not  be  rendered  harmless  by  absolute  governmental  con- 
trol of  rates  for  transportation  and  modifications  of 
tariff^  duties ;  that  mere  combinations  of  capital  with  a 
view  to  economy  of  production  and  administration  would 
be  so  far  controlled  by  competition,  in  the  absence  of 
rebates,  protective  tariffs,  and  other  special  privileges, 
that  the  monopoly  evil  in  them  would  soon  disappear. 
The  remedial  effects  of  government  ownership  of  rail- 
roads are  dwelt  upon  at  length  in  other  chapters.  Con- 
gress should,  however,  be  given  sufficient  control  over 
State  corporations  to  limit  their  powers  and  purposes 
of  organization.  The  resources  of  anthracite  coal  now 
belong  principally  to  certain  railway  companies.  When 
the  Government  takes  over  the  railroads,  they  and  these 

16 


DELUSIONS    AND    DECEPTIONS 

coal  properties  should  not  be  separated.  They  should 
be  acquired  together.  No  graver  danger,  in  the  way 
of  a  capitalistic  combination,  confronts  the  people  than 
the  possibility  of  a  transfer  of  the  coal  and  coke  sup- 
plies to  the  United  States  Steel  Corporation. 

In  view  of  the  vague  and  equivocal  utterances  of 
public  men  and  newspapers,  it  is  little  wonder  that  there 
are  a  number  of  popular  delusions  concerning  the  indus- 
trial monopolies  called  "  trusts."  Some  otherwise  very 
skilful  writers,  who  are  awarded  newspaper  and  maga- 
zine space,  appear  never  to  have  given  the  legal  status 
of  these  corporations  proper  consideration,  but  to  have 
contented  themselves  with  making  out  a  very  bad  case 
against  them  from  a  moral  and  economic  standpoint. 
And  yet  the  legal  questions  underlying  the  subject  are 
the  most  important,  and  must  be  understood  by  the  peo- 
ple in  order  to  instruct  their  representatives,  if  any 
adequate  remedy,  either  preventive  or  repressive,  is  ever 
to  be  provided.  So  many  thousands  of  columns  have 
been  published  in  newspapers,  and  so  many  books  have 
been  published,  expressive  of  the  popular  antagonism 
and  recitative  of  instances  of  abuse,  that  a  review  of 
even  a  small  percentage  of  them  is  out  of  the  question. 
In  few  instances  have  the  writers,  though  usually  non- 
professional, hesitated  to  express  legal  opinions  upon 
the  facts  presented  by  them  and  to  condemn  the  law  offi- 
cers of  the  Government  and  the  President  for  failure  to 
act  according  to  such  chimney-corner  deductions.  Speci- 
mens of  such  promulgations  are  found  in  recent  copies 
of  a  leading  New  York  paper.  In  the  first  of  a  series 
of  articles  by  a  talented  lady  contributor,  the  evident 
purpose  of  which  was  to  keep  at  high  tide  the  crusade 
against  the  Standard  Oil  Company  started  in  Kansas, 
she  indicts  that  corporation  on  several  counts,  the  sub- 
stance of  which  is:  First,  that  it  enjoys  discriminatory 
rates  for  railroad  services;  secondly,  that  by  refusing 

17 


BOSSISM    AND    MONOPOLY 

to  serve  competitors  and  by  various  unfair  means,  in- 
cluding the  enjoyment  of  discriminatory  rates,  it  crushes 
competition.  It  must  be  admitted  that  facts  stated  by 
her  establish  these  two  ultimate  facts.  Then  comes  the 
lay-lady's  legal  opinion.  She  says :  "  There  is  no  name 
but  that  of  conspiracy  to  be  applied  to  an  effort  to 
drive  men  out  of  business  by  illegal  rates,  by  spying, 
by  bribing,  and  by  criminal  underselling."  And  this 
from  ex- Attorney  General  Monett,  of  Ohio,  in  the  same 
issue :  "  The  masses  have  been  educated  until  every  man, 
woman,  and  child  seems  to  know  that  the  economic  hold- 
up and  the  commercial  blight  the  Standard  Oil  crowd 
have  attempted  upon  Kansas  is  not  only  an  outrage, 
but  criminal  conduct,  and  they  will  not  be  satisfied  with 
investigating  commit1:ees  and  Fabian  policies.  They 
want  action,  criminal  and  civil,  in  State  and  Federal 
courts,  and  they  know  they  have  justice  on  their  side 
and  have  a  just  quarrel." 

The  foregoing  are  specimens  of  the  flood  of  litera- 
ture poured  out  during  the  last  few  years,  the  combined 
effect  of  which  is  to  befuddle,  delude,  and  mislead  the 
public  on  this  question.  And  it  is  one  the  far-reaching 
importance  of  which  cannot  be  overestimated.  Its  im- 
portance consists  in  the  fact  that  unless  some  means  to 
prevent  the  further  concentration  of  wealth  in  a  few 
hands,  and  some  form  of  redress  be  provided  for  past 
results  in  that  direction,  the  American  people  will  be 
reduced  to  a  more  pitiable  economic  condition  than  the 
common  people  of  Russia,  and  be  ruled  more  autocrat- 
ically and  cruelly  than  the  Russian  people  are  iniled  by 
the  Czar  and  his  ducal  court.  The  mere  shell  and  name 
of  representative  government  may  be  retained,  because 
it  best  serves  the  purposes  and  perpetuates  the  iron  rule 
of  our  railroad  barons  and  industrial  kings ;  but  that  is 
all  that  may  be  hoped  for  if  the  present  tendency  be 
not  reversed. 

18 


DELUSIONS    AND    DECEPTIONS 

If  Mr.  Monett  and  the  other  propagandists  will 
have  an  investigation  made  of  the  legal  and  constitu- 
tional aspects  of  this  question  they  will  find:  First,  that 
the  oft-cited  Sherman  Anti-Trust  Act  contains  no  pro- 
vision under  which  any  court  can  afford  relief  against 
such  entities  as  the  Standard  Oil  Company;  secondly, 
that  that  act  is  the  full  measure  of  the  power  of  Con- 
gress under  the  Constitution ;  and,  thirdly,  that  to  re- 
store the  industrial  liberties  of  the  people  of  the  United 
States  either  new  powers  must  be  conferred  upon  Con- 
gress by  an  amendment  of  the  Federal  Constitution, 
followed  by  an  exercise  of  additional  power  in  the  form 
of  new  legislation,  or  the  "  trusts  "  must  be  reached 
through  government  ownership  of  the  instruments  of 
interstate  commerce  and  a  general- withdrawal  of  special 
privileges. 

The  question  of  boss  rule  precedes  that  of  monop- 
oly rule.  The  monopoly  stands  back  of  the  boss,  but 
the  boss  must  be  first  gotten  rid  of.  Then  the  mo- 
nopoly question  should  be  given  next  and  deepest  con- 
sideration. 

The  retention  or  abandonment  of  the  Philippine 
Islands  may  be  important  as  an  administrative  question ; 
indeed,  it  may  involve  a  question  of  imperialism.  But 
that  question  is  not  nearly  of  such  immediate  importance 
to  the  voter  as  is  internal  despotism  and  the  rule  of 
commercial  graft  and  extortion,  under  which  the  earn- 
ings of  the  people  are  continuously  impounded  and  their 
ownership  of  their  property  imperiled  by  ever-increas- 
ing exactions  to  pay  interest  on  loans,  no  part  of  which 
the  people  ever  receive,  and  dividends  on  stocks  which 
represent  very  little,  if  any,  actual  investment.  If  our 
Philippine  policy  is  wrong,  those  responsible  for  it  will 
soon  come  to  see  the  error  and  aid  in  a  correction  of  it. 
If,  as  the  opposition  leaders  claim,  it  amounts  to  im- 
perialism,  there    is   no   danger   of  its   tide   ever   rising 

19 


BOSSISM    AND    MONOPOLY 

higher  than  the  mark  attained  by  the  acquisition  of 
those  islands. 

The  coinage  question?  Fortunately,  that  distract- 
ing issue  has  been  sidetracked  by  the  trend  of  events. 
The  financial  obligations  of  the  common  people  to  each 
other  and  to  money-lenders  who  hold  mortgage  security 
gave  principal  importance  and  acutencss  to  that  ques- 
tion. Famines  abroad,  good  crops,  an  increased  pro- 
duction of  the  favored  metal,  and  other  events,  cooper- 
ating and  contributing  to  commercial  and  industrial 
activity,  called  prosperity,  have  enabled  most  honest 
debtors  to  settle  with  each  other  and  cancel  the  mort- 
gages. The  principal  debtors  now  are  the  bankers,  and, 
especially  since  they  almost  unanimously  favored  the 
gold  standard,  people  are  content  to  let  them  pay  in 
gold.  The  silver  coinage  question  is  not  at  present 
claimed  by  either  leading  party  to  be  an  issue.  It  may 
be  in  the  near  future  when  the  monopolies  have  impov- 
erished the  people,  when  a  bad  crop  year  comes  along, 
when  goods  accumulate  and  prices  fall,  when  the  people 
rush  to  the  banks  and  the  banks  to  the  national  treas- 
ury, and  it  is  found  that  the  gold  reserve  is  insufficient 
and  that  foreign  creditors  have  exported  the  bank  re- 
serves. A  question  of  money  for  ultimate  redemption 
and  of  its  quality,  a  question  of  whether  it  would  not 
be  well  to  have  a  hoard  of  standard  silver  dollars  to 
fall  back  on  may  arise;  but  that  condition  troubles  but 
few  people  at  present,  nor  can  anyone  be  accused  of 
partisanship  for  discussing  it. 

Militarism.?  In  view  of  the  fact  that  it  is  impos- 
sible to  obtain  naval  recruits  to  fill  the  places  of  desert- 
ers, and  that  the  War  Department  cannot  by  utmost 
effort  keep  the  army  ranks  anywhere  near  up  to  their 
full  quota,  and  that  a  foreign  war  would  have  to  be 
an  obviously  just  war,  undertaken  for  a  cause  which 
strongly  appealed  to  the  sympathies  of  the  masses,  in 

20 


DELUSIONS    AND    DECEPTIONS 

order  to  avoid  resort  to  conscription,  who  has  any  just 
cause  to  tremble  on  account  of  the  recent  or  any  con- 
templated increase  in  the  standing  army?  A  standing 
army  to  intimidate  labor?  The  Cossacks  may  shoot 
and  stab  workingmen  in  the  streets  of  St.  Petersburg 
in  order  to  keep  their  own  heads,  but  American  work- 
men will  have  to  do  much  worse  things  than  they  have 
ever  done  before  our  soldiery  will  do  violence  to  them 
for  the  protection  of  stolen,  and  therefore  "  vested," 
capital.  And  so  of  other  subjects  sometimes  made  to 
do  service  in  political  campaigns,  and  at  other  times 
ignored;  they  will  pale  into  insignificance  or  identify 
themselves  with  the  one  great  question  of  breaking  up 
the  combinations  of  men  of  enormous  wealth  who  now 
hold  in  their  hands,  as  firmly  as  the  President  holds  the 
veto  power  or  King  Edward  his  scepter,  the  financial 
well-doing  of  all  business  men,  however  widely  the  term 
be  applied,  and  the  means  of  existence  of  labor.  It  is 
not  the  present  purpose  to  make  political  capital  for 
any  candidate  or  party,  but  to  aid  in  so  arousing  the 
people  in  a  common  cause  against  grievous  abuses  that 
such  cause  will  fail  to  become  a  mere  party  issue  and 
become  an  accepted  policy  with  all  parties.  Then  a 
good  result  must  follow,  as  day  follows  night. 

Probably  three-fourths  of  the  electorate  of  the 
United  States,  and  a  majority  in  each  State,  upon 
being  fully  advised  and  urged  to  action  would  act  in 
unison  to  throw  off  the  incubus  which  now  rests  more 
or  less  heavily  upon  all  but  a  few  thousand  who  directly, 
and  to  a  considerable  extent,  profit  by  special  privileges. 
What  is  needed  is  a  common  viewpoint  from  which,  for- 
getting temporarily  individual  hobbies,  idiosyncrasies, 
and  party  ties,  fundamental  evils  can  be  seen  in  their 
true  and  just  proportions.  This  common  standpoint 
and  unison  of  opinion  being  found,  there  cannot  long 
be  a  difference  of  opinion  with  respect  to  the  remedy. 

oi 

4^  X 


BOSS  ISM    AND    MONOPOLY 

Several  of  the  best  thinkers,  speakers,  and  writers  of 
this  country  agree  that  the  name  which  fits  and  describes 
the  great  evil  of  these  times  is  "  monopoly."  Particu- 
lar evils  of  which  various  political  a\id  industrial  or- 
ganizations complain  are  harped  on  by  the  leaders  of 
such  organizations,  apparently  for  no  other  purpose 
than  to  maintain  and  perpetuate  these  organizations. 
One  organization  exhausts  its  energies  to  secure  in- 
creased wages,  shorter  hours,  and  better  general  condi- 
tions for  wage-earners.  The  obstacle  and  opposing 
force  against  which  this  organization  directs  its  efforts 
is  given  by  its  leaders  the  name  of  "  capitalism."  Now, 
the  cleavage  and  strife  between  labor  and  capital  began 
when  monopoly  first  began  to  assert  itself.  Prior  to 
combinations  of  industrial  capital,  and  prior  to  the  as- 
sertion and  exercise  by  preexisting  monopolies  of  the 
power  to  dictate  and  control  wages  as  a  part  of  the 
detestable  doctrine  of  extracting  from  business  the 
utmost  possible  dollar  and  to  rate  labor  as  a  mere  com- 
modity, no  necessity  was  seen  for  brotherhoods  and 
unions  as  bodies  having  interests  to  be  protected  against 
capitalistic  selfishness.  In  other  words,  but  for  the 
presence  of  combinations  of  capitalists,  having  the  will 
and  power  to  fix  and  adhere  to  wage  rates  in  spite  of 
the  opinion  and  contention  of  the  individual  wage- 
earner,  the  only  mission  of  the  unions  and  federations 
would  be  social  interchange.  These  views  are  suscep- 
tible of  considerable  elaboration,  but  it  is  thought  that 
their  soundness  will  be  at  once  seen  and  appreciated. 
The  inevitable  conclusion  is  that  that  which  oppresses 
labor  is  not  capital  per  se,  but  capitalistic  combination ; 
in  other  words,  monopoly.  Another  organization — this 
time  political — would  entirely  eliminate  capitalism  in 
its  individual  aspects.  Without  pretending  to  either 
sanction  or  oppose  socialism,  it  might  be  well  to  remind 
its  advocates  that  monopoly  is  individualism  run  mad 


DELUSIONS    AND    DECEPTIONS 

— individualism  which  has  burst  its  bonds  and  grown  to 
monstrous  proportions.  Socialistic  teachers  profess  to 
see  in  the  growth  of  monopoly  a  final  triumph  of  social 
democracy.  But  to  leave  monopoly  to  consummate  its 
final  result  with  the  hope  of  turning  its  rule  into  the 
rule  of  the  socialist  would  be  as  foolish  as  the  policy  of 
the  backwoodsman  who  captured  a  young  bear  and 
turned  it  over  to  his  two-year-old  son  for  a  playmate. 
Being  of  about  equal  strength  at  first  they  got  along 
splendidly  together.  But  the  bear  gained  strength 
faster  than  the  boy,  and  in  the  course  of  time  squeezed 
the  life  out  of  him.  So  it  would  be  with  the  boy  Social- 
ism and  the  bear  Monopoly. 

The  ordinary  politician,  seeking  office  for  himself 
or  others,  attempts  to  "  take  in  all  the  shores  at  once." 
So  he  draws  up  a  platform  for  protection  or  low  tariff, 
metallic  or  paper  money,  pro-  or  anti-national  bank 
privileges,  for  weak  or  a  mandatory  railroad  rate  bill, 
for  immediate  or  future  self-government  in  the  Philip- 
pines, etc.,  according  to  party  name.  These  are  all 
ointments,  far  different  from  what  is  needed  for  a  deep- 
rooted  sore.  None  of  them  will  give  any  permanent 
relief.  Whether  any  of  them  will  even  afford  surcease 
is  a  debatable  question,  a  question  so  doubtful  that  the 
voters  divide  almost  equally  as  to  their  relative  ex- 
pediency. But  what  the  people  are  about  to  demand 
is  a  surgical  operation.  It  may  be  painful,  but  it  is 
not  dangerous,  nor  are  its  beneficial  results  in  doubt. 

The  sore  must  be  removed.  The  cause  of  official 
corruption,  the  obstacle  to  just  laws,  the  menace  to  lib- 
erty, having  been  gotten  rid  of,  the  lesser  evils  may  be 
studied  and  remedied  by  honest  patriotic  motives,  unin- 
fluenced by  bribes  in  the  various  forms  in  which  they 
are  offered.  All  must  agree  that  with  the  Federal 
Government  operating  interstate  railroads,  the  States 
operating  local  railways,  and  municipalities  furnishing 
3  23 


BOSSISM    AND    MONOPOLY 

the  various  forms  of  public  service  in  cities,  a  better 
class  of  men  will  seek  and  obtain  public  office.  Then 
official  places  will  be  considered  honorable  and  will  not 
place  the  incumbent  under  that  grave  suspicion  which 
now  causes  most  self-respecting  men  to  shrink  from  po- 
litical office,  leaving  the  field  open  to  self-serving  tools 
of  the  bosses. 

Somehow  the  politicians  and  newspapers  make  us 
believe  that  business  is  in  a  prosperous  condition  and 
that  general  prosperity  prevails.  To  learn  the  real 
status  of  business  under  the  rule  of  monopoly  one  should 
study  the  experiences  of  those  who  have  been  forced  out 
of  business  in  anticipation  of  pressure  being  applied, 
have  sold  out  and  sought  other  profitable  investments. 
One  such  finds  himself  against  a  steel  fence,  no  matter 
which  way  he  turns.  He  can  do  no  business  except  by 
leave  of  some  colossal  interest  in  control  of  certain 
brands  of  goods  in  which  he  must  deal,  or  not  deal  at 
all.  He  can  no  more  fix  his  own  margin  of  profit  than 
he  can  the  amount  of  license  tax  or  other  taxes  which 
he  must  pay.  If  he  investigates  with  a  mind  to  starting 
up  some  small  manufacturing  plant,  he  finds  that  indi- 
vidual industries  are  no  more.  A  man  of  small  capital 
is  crowded  out,  and  there  is  nothing  left  for  him  but 
to  become  a  cog  in  some  great  wheel.  He  may  put  his 
money  in  the  stock  of  a  trust,  but  he  then  has  before 
him  the  almost  certain  prospect  of  sooner  or  later  being 
frozen  out  by  the  big  stockholders  and  left  dependent 
upon  the  wages  which  the  final  owners  choose  to  give, 
and  those  wages  subject  to  continual  nice  calculations 
as  to  how  small  a  ration  will  sustain  a  man  in  working 
order.  Not  only  the  oil  and  gas  one  bums,  but  the 
meat  and  milk  he  buys,  the  flour  he  bakes,  the  hats, 
shoes,  and  clothing  he  wears,  everything  he  touches, 
tastes,  and  handles  are  controlled  by  trusts,  aided  by 
discriminating    freight   tariff's.      While   there   may    be 

M 


DELUSIONS    AND    DECEPTIONS 

great  margins  of  profit  in  their  manufacture  by  the 
trust,  there  is  none  for  the  individual  embarking  in  their 
production.  On  but  few  articles  has  the  retail  merchant 
been  left  the  liberty  to  fix  the  selling  price.  Let  one  go 
into  any  store  and  investigate  for  himself.  If  he  in- 
quires how  they  are  selling  this,  that,  and  any  other 
article,  he  usually  finds  the  retailer  tied  up  by  an  iron- 
clad agreement  to  sell  such  and  such  goods,  and  at  such 
and  such  prices ;  and  the  penalty  for  a  violation  of  the 
contract  is  that  the  trust  will  deprive  him  of  the  right 
to  handle  its  line  of  goods  at  any  price.  How  long 
before  merchants  will  be  deprived  of  the  privilege  of 
handling  trust-made  goods  on  any  terms?  Probably  the 
time  is  soon  to  come  when  the  "  Beef  Trust  "  will  estab- 
lish its  own  commodious  meat  shop  and  fruit  store  in 
each  city  and  town.  The  Standard  Oil  Company 
already  has  its  own  warehouses  and  delivery  wagons  in 
some  localities.  The  American  Tobacco  Company  has 
already  aggressively  taken  much  of  the  retail  trade 
away  from  its  former  patrons.  How  long  before  the 
other  trusts  will  follow  the  example  of  these  colossal 
monopolies  ? 

Instead  of  addressing  themselves  to  true  conditions 
our  partisan  leaders  dwell  upon  commercial  prosperity, 
which  means  no  more  under  present  conditions  than  the 
success  of  vast  conspiracies  against  common  weal,  the 
triumph  of  greed  and  avarice.  Liberty  is  not  safe  in 
a  country  whose  loudest  boast  Is  of  that  kind  of  pros- 
perity. There  can  be  no  honest  party  whose  leaders 
are  controlled  by  those  who  owe  allegiance  to  no  standard 
unless  it  bear  the  stamp  of  the  dollar  mark. 

Just  imagine,  if  you  can,  the  people  of  the  colonies 
submitting  to  such  a  political  and  industrial  despotism 
as  now  holds  with  an  iron  grip  the  destinies  of  their 
descendants.  Even  half  a  century  later,  in  the  days  of 
Andrew  Jackson,  the  people  would  have  endured  only 

25 


BOSSISM    AND    MONOPOLY 

until  they  could  get  to  the  polls.  What  we  need  most 
is  a  few  thousands  more  of  voters  in  each  State  with 
the  courage  of  their  convictions,  who  will  turn  a  deaf 
ear  to  the  appeals  of  partisanship,  defy  those  who  call 
them  soreheads,  socialists,  or  traitors  to  "  the  organiza- 
tion," and  vote  only  for  candidates  who  favor  essential 
reforms.  The  real  enemy  of  the  voter  is  not  the  oppo- 
sition party,  but  non-partisan  conspiracies  between  his 
own  party's  bosses  and  the  monopolists.  The  way  to 
beat  them  is  to  form  one  grand  non-partisan  combina- 
tion of  voters  whose  bond  of  union  is  a  common  under- 
standing that  no  monopoly  or  "  trust  "  shall  exist  in 
this  country  except  in  the  hands  of  the  Government. 
By  the  same  act  that  frees  them  from  monopoly  they 
free  themselves  from  the  bosses.  A  firm  resolve  by  the 
majority,  and  the  thing  is  done.  Of  course  there  are 
those  who  will  say  the  undertaking  is  too  stupendous, 
that  the  combinations  of  capital  and  influence  against 
them  are  too  powerful,  and  political  parties  control  the 
Government.  If  the  voters  do  not  take  hold  of  the 
parties  and  shape  them  to  their  will,  whom  can  they 
blame  if  not  themselves.'' 

Men  are  prone,  in  political  as  in  some  other  affairs, 
to  take  too  many  things  for  granted.  When  Russia, 
taking  advantage  of  the  weakness  of  China,  occupied 
Manchuria  and  invaded  Corea,  thereby  defeating  the 
"  open-door "  policy,  the  other  nations  stood  aghast, 
assuming  that  no  nation  was  able,  single-handed,  to  suc- 
cessfully resist  with  arms  the  mighty  armies  of  so  great 
a  nation,  and  that  either  submission  to  defeat  of  the 
policy  of  an  open  door  to  China  or  universal  war  was 
the  only  alternative.  But  the  Japanese,  a  people  occu- 
pying an  island  no  larger  than  an  average  American 
State,  taking  nothing  for  granted,  grappled  heroically 
with  this  Colossus  of  the  North,  and  the  whole  world 
knows  the  result.     There  is  a  lesson  in  this  that  applies 

26 


DELUSIONS    AND    DECEPTIONS 

directly  to  our  economic  industrial  and  political  prob- 
lems. It  is  folly  to  assume  that  the  people  approve 
organized  monopoly,  organized  graft,  organized  greed. 
And  as  for  the  bosses,  they  are  the  representatives  of 
these  same  monopolists  who  persistently  din  the  doctrine 
of  hopelessness  into  our  ears. 

The  difficulties  in  the  way  of  getting  rid  of  the  com- 
binations that  have  been  formed  in  the  past  few  years 
to  exploit  the  public  and  control  the  fiscal  affairs  of  the 
Republic  are  more  imaginary  than  real.  The  factors 
that  have  united  to  form  them  are  held  together  by  the 
lust  for  spoil.  In  the  case  of  any  other  criminal  league 
a  well-directed  police  raid  is  all  that  is  required  to  com- 
pel its  dispersion.  And  so  with  corrupt  party  machines, 
by  which  is  meant  all  so-called  party  organizations  under 
control  of  bosses,  these  can  be  easily  reached  and  con- 
verted into  agencies  for  the  destruction  of  monopoly 
rule  and  the  introduction  of  an  era  of  government  own- 
ership of  every  enterprise  which,  whether  in  private 
hands  or  in  the  hands  of  the  Government,  can  be  used 
to  tax  the  general  public  in  the  form  of  freights,  fares, 
and  rates. 

Let  us  in  the  movement  for  emancipation  not  forget 
the  most  oppressive  of  all  trusts,  the  one  which  reaches 
into  every  city,  town,  hamlet,  and  district,  and  absorbs 
"  all  the  traffic  will  bear  " — the  steam  railroads.  Three- 
fourths  of  the  people  favor  public  ownership.  Have 
they  the  courage  to  demand  it  and  vote  for  it.''  Noth- 
ing restrains  them  but  a  fear  of  disfavor  with  party 
leaders.  But  party  leaders  will  be  found  unwilling  to 
oppose  a  widespread  sentiment  in  favor  of  government 
ownership,  and  a  few  unequivocal  manifestations  of 
such  sentiment  will  force  them  to  that  side — or  into 
retirement. 

And  the  voter  should  ever  remember  the  foolishness 
of  recognizing  the  unconditional  continuity  of  partisan 

27 


BOSSISM    AND    MONOPOLY 

allegiance.  Let  the  voter  adopt,  to  a  limited  extent,  the 
tactics  of  the  boss.  If  a  party  is  going  his  way,  he 
should  get  aboard  and  ride,  as  in  the  case  of  a  street 
car.  But  suppose  it  is  going  the  other  way.  Would 
he  not  be  a  fool  to  ride  in  it,  even  though  he  paid 
no  fare.'' 


28 


CHAPTER    II 

PARTNERSHIP    BETWEEN    PARTY    BOSSISM    AND    MONOPOLY 

"A  partial  truth,  universally  applied,  as  this  of  self-interest  has 
been,  is  a  universal  error.  Everything  goes  to  defeat.  Highways  are 
used  to  prevent  travel  and  traffic.  Ownership  of  the  means  of  pro- 
duction is  sought  in  order  to  shut  down  production,  and  the  means 
of  plenty  made  famine.  All  follow  self-interest  to  find  that,  though 
they  have  created  marvelous  wealth  it  is  not  theirs.  '  We  pledge  our 
lives,  our  fortunes,  and  our  sacred  honor'  to  establish  the  rule  of  the 
majority,  and  end  by  finding  that  the  minority — a  minority  in  morals, 
money,  and  men — are  our  masters  whichever  way  we  turn." — William 
Demarest  Lloyd. 

Optimism  is  popular.  It  has  become  one  of  the  fads 
of  a  perverted  and  degenerating  democracy  to  ridicule 
and  shame  to  silence  and  patient  submission  those  who 
would  disapprove  present  political  conditions  and  tend- 
encies. Even  an  honest  temperate  statement  of  abuses 
and  suggestion  of  dangers  is  likely  to  excite  ridicule 
and  call  for  the  application  of  opprobrious  epithets. 
But  the  people  should  welcome  the  advent  at  this 
juncture  of  all  such  intelligent,  persistent  advocates  of 
reform  as  President  Roosevelt,  Bryan,  La  Follette, 
Hearst,  Dunne,  and  Folk.  However  grewsome  the 
tasks  they  have  severally  set  for  themselves  their  utter- 
ances are  well  calculated  to  arouse  men  to  thought  and 
action,  just  what  is  most  needed;  and  the  experiences  of 
their  audiences  and  readers  are  confirmations  of  their 
teachings.  It  is  encouraging  to  know  that  while  the 
seats  of  financial  empire  are  filled  by  the  beneficiaries 
of  monopoly,  their  titles  to  those  seats  are  being  con- 
tested and   disputed,   and   that  the   dishonest   methods 

29  * 


BOSSISM    AND    MONOPOLY 

by  which  occupancy  was  gained  are  being  constantly 
exposed. 

It  is  not  hkely  that  the  people  will  much  longer 
delay  action  whether  Mr.  Roosevelt  takes  the  lead  in 
any  genuine  reform  or  not.  In  view  of  the  little  use 
he  has  been  able  to  make  of  his  power  for  the  better- 
ment of  conditions,  the  people  may  have  to  select  other 
leaders  in  the  great  work  cut  out  for  them  by  the 
trusts,  railroads,  and  party  bosses.  They  will  apply 
radical  treatment,  lay  siege  at  once  to  the  main  fortress 
of  special  privilege,  which  is  private  ownership  of  the 
means  of  interstate  commerce,  giving  the  fair  and  just 
compensation  mentioned  in  the  Constitution,  first,  how- 
ever, making  such  amendments  to  the  Constitution  as 
will  render  this  great  change  effectual  and  permanent. 
Not  that  the  Constitution  stands  in  the  way  of  accom- 
plishing government  ownership.  It  stands  in  the  way, 
however,  of  a  Senate  elective  by  popular  vote,  which 
is  one  of  the  reforms  necessary  to  the  continuous  ex- 
ercise of  the  powers  granted  to  Congress  by  the  present 
Constitution. 

It  is  often  asserted  that  notwithstanding  the  taint 
given  our  political  system  by  boss  and  monopoly  rule, 
still  ours  is,  in  the  main  a  government  of  laws,  not  of 
men.  That  is  in  a  great  measure  true,  where  the  in- 
terests of  the  rich  and  powerful  do  not  come  in  conflict 
with  those  of  the  common  people.  Most  of  the  great 
corporations  violate  the  laws  habitually,  and  such 
habitual  practices  are  so  interwoven  with  the  legitimate 
rules  which  they  formulate  for  the  transaction  of  busi- 
ness, that  it  is  difficult  to  distinguish  the  one  from  the 
other.  The  people  have  become  so  accustomed  to  the 
difference  in  treatment  awarded  to  poor  and  rich  male- 
factors that  they  give  the  subject  but  little  thought 
until  some  circumstance  accentuates  the  difference. 

The  public  service  corporation,  through  its  special 
30 


MONOPOL Y-BOSS    PARTNERSHIP 

agents,  or  through  its  regular  intermediary,  the  party 
boss,  bribes  the  legislative  bodies  of  a^city,  year  after 
year,  as  fast  as  they  are  elected,  thereby  robbing  the 
electorate  of  millions  of  dollars.  Rarely  does  a  convic- 
tion, or  even  a  formal  accusation,  overtake  either  the 
bribe-giver  or  the  bribed.  But  see  what  happens  to 
a  subordinate  in  some  department  who  embezzles  a  few 
hundred  dollars.  If  a  starving  tramp  holds  up  a  citi- 
zen on  a  dark  night  and  secures  by  menace  and  duress 
a  few  dollars  or  a  watch  and  is  caught,  he  is  sure  of 
a  long  term  in  State  prison, — and  in  addition  must 
endure  a  lecture  from  the  court  pronouncing  the  sen- 
tence. But  the  railway  traffic  manager  grants  enough 
in  rebates  to  a  large  shipper  to  ruin  his  weak  competi- 
tors, a  crime  whose  heinousness  is  not  measured  by  any 
statutes ;  he  does  this  in  hundreds  and  thousands  of 
instances  and  on  an  elaborate  scale.  And  so  far  from 
going  to  prison  or  even  paying  a  fine,  he  is  promoted 
to  the  head  of  one  of  the  great  departments  of  the 
Federal  Government.  And  when  he  gets  into  office,  he 
practices  the  same  policy  by  awarding  all  contracts  for 
armor  plate  to  a  trust  over  an  independent  producer 
of  a  better  article  at  a  lower  price.  And  all  this  be- 
cause of  the  overmastering  influence  of  boss  and 
monopoly  rule  over  executives  as  well  as  over  those 
whose  duty  it  is  to  enforce  the  penal  provisions  of  the 
interstate  commerce  laws.  And  when  the  public  clamor 
for  his  removal  becomes  uncomfortably  insistent,  he  is 
unloaded  through  Wall  Street  influences  and  a  hold 
and  strenuously  worded  presidential  indorsement  into  a 
.$50,000  a  year  job.  And  the  Equitable  policy  hold- 
ers are  saying:  "  Paul,  Paul,  why  persecutest  thou 
us !  "  And  another  railroad  official,  this  time  a  presi- 
dent, is  appointed  to  the  head  of  the  Panama  Canal 
Commission  at  a  salary  greater  than  that  of  the  Chief 
Justice  of  the   Supreme  Court,   retaining  his   railroad 

31 


BOSS  ISM    AND    MONOPOLY 

job,  and  through  the  same  Influence  maintains  high 
rates  on  the  Panama  railway,  belonging  to  the  Govern- 
ment, for  the  avowed  purpose  of  preserving  the  benefits 
of  monopoly  to  transcontinental  railways.  And,  de- 
spite any  law  to  the  contrary,  rates  are  fixed  so  as  to 
extract  from  shippers  all  the  traffic  will  bear;  for  in- 
stance, if  the  profits  on  a  carload  after  paying  a 
reasonable  rate  would  be  $500,  a  rate  is  charged  which 
robs  the  shipper  of  $400  of  his  profits  over  and  above 
the  reasonable  rate,  by  using  the  monopoly  weapon. 
The  men  who  do  this  are  rated  "  respectable  citizens  " ; 
but  if  a  striker  assaults  a  scab  who  is  trying  to  steal 
his  job,  he  is  fined  and  sent  to  prison.  If  a  collector 
for  a  gas  company  should  collect  $10  and  return 
but  $5,  he  would  be  prosecuted  for  stealing  and  per- 
manently disgraced;  but  if  the  superintendent  of  the 
same  company  falsifies  bills  and  rigs  up  meters,  where- 
by they  give  false  measurements  and  swindle  consumers, 
a  party  boss  stays  the  hand  of  justice  and  the  su- 
perintendent continues  to  be  an  important  financial 
figure  and  a  social  ornament.  Millionaires  conspire  to 
work  prices  up  and  down  on  exchanges  and  rob  the 
public  of  enough  money  to  finance  a  kingdom,  and  are 
accorded  large  space  in  newspapers  for  the  expression 
of  their  indignation  against  gamblers  and  other  vicious 
classes.  Then  they  use  part  of  the  ill-gotten  gains  to 
bribe  a  municipal  council  or  a  State  legislature  or  Con- 
gress to  grant  them  valuable  special  privileges. 

Some  of  the  newspapers  and  periodicals  are  open 
advocates  and  others  are  apologists  for  monopolies. 
This  is  a  time  when  free  and  full  speech  is  much  needed. 
Look  at  the  condition  of  Russia,  where  such  a  thing  as 
an  independent  press  is  unknown,  and  then  reflect  that 
ours  will  soon  be  no  better  unless  present  tendencies  are 
reversed. 

Already  we  are  to  a  great  extent  a  people  struggling 


MONOPOLY-BOSS    PARTNERSHIP 

in  the  dark.  Most  of  us  do  not  know  to-day  what  is 
going  on  in  our  legislative  halls  or  executive  depart- 
ments. Men  go  into  office  poor,  at  the  dictation  of  a 
party  machine,  and  in  a  few  years  retire  into  the 
presidency  of  a  bank  or  trust  without  the  source  of 
their  prosperity  ever  being  learned  or  even  put  in  issue. 

The  whole  nation  was  recently  amazed  and  enraged 
at  the  disclosures  of  two  of  the  officials  of  the  great 
insurance  companies  with  reference  to  the  misuse  of 
trust  funds  for  political  and  other  corrupt  purposes. 
It  was  so  well  understood  that  the  Democratic  National 
Committee,  as  constituted  in  the  campaign  of  1904, 
was  not  averse  to  receiving  aid  from  the  same  sources 
from  which  the  Republican  campaign  fund  was  drawn 
that  no  attempt  was  made  by  any  Democratic  organ  to 
make  political  capital  out  of  the  disclosures  thus  made 
under  oath  before  a  legislative  committee.  But  all  or 
nearly  all  both  of  press  and  people  appeared  to  lose 
sight  of  the  conditions  which  brought  about  the  prac- 
tice, the  real  cankerworm  that  is  eating  at  the  core  of 
the  Government.  These  corporate  officers  have  been 
permitted  by  a  too  credulous  people  to  take  charge  of 
the  machinery  of  government,  both  National  and  State, 
and  to  build  up  a  system  of  special  laws  at  war  with 
that  common  right  which  was  the  cornerstone  of  lib- 
erty in  England  from  time  immemorial.  Government 
in  this  country  within  the  last  fifty  years  has  had  a 
new  foundation  laid  and  a  new  superstructure  erected 
thereon.  Originally  the  test  of  legislation  was  the 
equality  of  its  benefits  and  burdens ;  that  is  to  say,  the 
question  was  one  of  public  justice.  But  now  the  test 
is  its  effect  upon  accumulated  wealth  and  its  bearing 
upon  the  interests  of  the  financiers  of  the  Morgan, 
Rockefeller,  Ryan,  and  Harriman  class. 

It  was  brought  out  at  the  same  investigation  that 
hundreds  of  thousands  of  dollars  were  quietly  and  se- 

33 


B0SSIS3I    AND    MONOPOLY 

cretly  transferred  from  the  vaults  of  the  great  in- 
surance companies  to  certain  counsel  in  charge  of  the 
legislative  interests  of  these  companies,  otherwise  known 
as  professional  lobb3nsts.  No  satisfactory  account 
could  be  given  of  the  disposition  finally  made  of  these 
funds.  Of  course  it  would  help  the  matter  but  little 
if  the  legislative  results  of  these  corrupt  appropria- 
tions could  be  shown  to  have  been  beneficial  to  policy 
holders.  But  as  a  matter  of  fact  no  legislation  has 
been  passed  or  sought  at  Albany,  or  elsewhere,  of  that 
kind,  but  rather  such  changes  in  the  law  as  dispensed 
with  annual  reports  in  detail  of  expenditures  and  use 
of  funds — ^just  such  changes  as  permitted  these  mis- 
appropriations to  be  made  and  concealed. 

The  daily  papers  during  the  investigation  desig- 
nated the  testimony  as  sensational;  and  they  in  fact 
did  cause  a  number  of  midnight  conferences  in  places 
of  very  high  official  authority  and  were  responsible  for 
considerable  loss  of  sleep  by  persons  in  very  comfort- 
able circumstances.  But  these  revelations  are  merely 
the  coming  to  the  surface,  as  a  result  of  skillful  stirring 
and  probing,  of  a  tithe  of  the  vast  strata  of  corrup- 
tion that  every  thoughtful  and  observant  person  knows 
is  concealed  at  the  bottom  of  "  high  "  finance  and  parti- 
san ring  rule.  If  those  in  control  of  the  insurance  com- 
panies can  shape  to  their  will  insurance  legislation, 
those  in  control  of  the  national  banks  and  of  other 
great  aggregations  of  money  and  securities  can,  and 
of  course  do,  control  financial  legislation,  and  those  in 
control  of  the  great  "  trusts,"  built  up  and  fostered  by 
discriminating  tariffs,  can  and  do,  of  course,  control 
tariff  legislation.  All  these  bespeak  governments.  Na- 
tional and  State,  that  are  rotten  to  the  core,  a  much 
more  serious  matter  than  the  mere  fact  that  upon  a 
particular  occasion  certain  men  used  to  corrupt  the 
electorate  of  the  nation  a  certain  large  sum  of  trust 

34 


MONOPOLY-BOSS    PARTNERSHIP 

money.  The  real  grievance  is  that  pubhc  justice  is  so 
rare  and  the  souls  of  lawmakers  and  others  in  high 
station  are  so  cheap. 

Henceforth  the  political  dividing  line  should  be 
drawn  between  those  who  favor  perpetuating  present 
conditions  and  tendencies  to  their  inevitable  results,  and 
those  standing  for  an  effective  remedy.  The  terms 
Republican  and  Democrat  will  not  hereafter  neces- 
sarily mean  anything.  The  opposing  forces  will  be 
more  properly  designated  as  conservatives  and  radi- 
cals, the  one  opposing  all  reforms  and  favoring  a  drift 
to  the  inevitable  fruits  of  progressive  monopoly,  the 
other  waging  incessant  M^ar  for  emancipation. 

What  all  leaders  seeking  the  great  reform  to  be 
accomplished  through  government  ownership  should 
strive  to  do  is  to  induce  their  fellow  workers  for  the 
same  end  to  drop  for  a  time  minor  reforms  which  will 
naturally  come  with  that,  or  be  much  easier  to  consum- 
mate after  that  is  attained.  As  the  Chicago  Public 
well  says :  "  No  real  battle  between  public  rights  and 
special  privileges  ever  comes  on  in  simple  or  unmistak- 
able form.  The  crucial  question  is  always  so  compli- 
cated with  other  issues  as  to  bewilder  men  of  the  best 
intentions  and  good  judgment  who  happen  to  be  in- 
terested on  the  right  side  of  those  other  issues.  It  is 
upon  bewilderments  like  these  that  conscious  advocates 
of  privilege  depend  for  dividing  the  forces  of  their 
enemy  when  such  a  division  becomes  vital  to  them." 

Those  who  oppose  granting  powers  to  Congress 
necessary  to  enable  it  to  curb  and  control  monopoly  and 
eradicate  trust  evils,  and  electing  senators  by  direct 
vote,  so  as  to  secure  a  congress  willing  to  take  proper 
action,  are  of  two  classes :  ( 1 )  The  direct  representa- 
tives of  monopoly  interests  inside  and  outside  Congress, 
Cabinet,  and  Judiciary;  and  (2)  those  well-mean- 
ing but  misguided  publicists  who  carry  the  doctrine  of 

'35 


BOSSISM    AND    MONOPOLY 

States'  rights  to  an  absurd  and  illogical  extent,  and 
others  who,  being  actuated  by  the  most  selfish  and  un- 
patriotic motives,  also  appeal  to  the  remaining  popular 
prejudice  against  an  invasion  of  the  power  reserved  to 
the  States.  That  governmental  powers  should  be 
mainly  retained  by  the  States  no  one  can  deny ;  but  it 
must  not  be  forgotten  that  certain  important  powers 
were  by  the  Constitution  given  to  the  central  Govern- 
ment, because  they  could  not  be  beneficially  exercised 
except  by  the  latter,  and  in  some  instances  from  their 
very  nature  could  not  be  exercised  by  the  States  at 
all.  There  is  in  the  Constitution  no  prohibition  against 
the  transfer  of  still  further  powers  from  the  States  to 
the  Federal  Government,  but  rather  a  very  explicit 
recognition  of  the  possibility  that  unforeseen  circum- 
stances and  conditions  might  arise  rendering  such 
transfer  proper  and  necessary.  This  is  seen  in  the 
provisions  providing  a  method  of  amendment.  So  it  is 
seen  that  the  legislative  powers  of  the  States  are  no  more 
sacred,  in  the  sense  of  being  fixed  and  unalterable,  than 
is  the  will  of  the  people  at  any  particular  era. 

The  promotion  of  wealth  to  the  seat  of  power,  and 
the  dominance  of  that  debasing  instinct  which  man 
holds  in  common  with  the  hog,  the  instinct  to  suppress 
all  sentiment,  stifle  all  appeals  for  justice  and  mercy,  in 
short,  to  barter  away  liberty,  life,  and  all  virtue  for 
selfish  gain,  was  not  foreseen  by  the  framers  of  the 
Constitution.  Mr.  Frank  P.  Adams,  in  Tom  Watson's 
Magazine,  of  recent  date,  says :  "  We  of  to-day  are 
caught  in  the  trap  set  for  those  who  lived  more  than 
a  hundred  years  ago.  Not  until  after  the  nation  had 
been  plunged  into  a  civil  war  between  two  factions — 
each  of  which  claimed  strict  allegiance  to  the  Constitu- 
tion— did  conditions  arise  which  afforded  a  fair  test 
of  the  restrictive  features  of  that  document.  So  long 
as  the  wealth  of  the  nation  was  so  distributed  as  to 

36 


MONOPOLY-BOSS    PARTNERSHIP 

prevent  the  formation  of  conspiracies  in  its  behalf,  the 
masses  were  able  to  conserve  their  rights,  despite  all  of 
the  checks  and  restrictions  in  the  Constitution.  It  was 
this  fairly  maintained  state  of  equilibrium  which  half  a 
century  ago  gave  rise  to  the  worship  of  our  system  of 
government.  When  the  first  unscrupulous  man  found 
himself  in  possession  of  millions  of  dollars  the  Consti- 
tution became  not  his  master  but  his  tool. 

While  there  is  nothing  sacred  or  in  its  nature  fixed 
and  unchangeable  in  State  power,  neither  is  there  any- 
thing alarming  in  the  transfer  of  more  power  to  the 
Federal  Government,  for  the  purposes  of  controlling 
monopoly.  Let  us  suppose,  as  we  may  well  anticipate, 
such  changes  as  will  make  the  Senate  truly  representa- 
tive and  responsive  to  the  will  of  the  people.  Then 
it  would  not  be  true  either  in  fact  or  theory  that  the 
people  who  stand  back  of  both  State  and  Federal  Gov- 
ernment have  lost  any  power  by  such  transfer.  They 
have  really  acquired  new  power.  What  power  they 
have  lost  as  citizens  of  States,  which  they  had  previ- 
ously exercised  lamely  and  ineffectively  through  State 
organs  of  legislation,  they  now  vigorously  and  effect- 
ively would  exercise  through  their  representatives  in 
Congress,  and  the  Executive. 

It  is  a  deplorable  fact  that  the  best  intellect  of  the 
country  is,  as  a  rule,  in  the  employ  of  the  monopolies, 
and  opposed  to  any  and  all  reforms.  With  the  same  in- 
finite skill,  power,  and  tact  that  one  of  them  would 
select,  impanel,  watch,  and  appeal  to  a  jury,  these 
mental  Ajaxes  shape  party  platforms,  rig  conventions, 
dictate  candidates,  and  censor  the  speeches  and  docu- 
ments to  be  used  in  carrying  on  campaigns. 

It  is  a  discouraging  fact  to  those  who  expect  any 
genuine  reform  under  the  reg^ime  of  party  and  major- 
ity-spoils party  influence,  that  when  a  party  succeeds 
in  electing  its  candidates,  the  leaders  conclude  that  the 

37 


i^  3  S.'^S^ 


BOSSISM    AND    MONOPOLY 

Government,  its  revenues,  and  possessions  belong  to 
their  party  rather  than  still  belonging  to  the  people  at 
large.  It  is  a  matter  which  all  who  observe  closely  have 
learned,  and  which  anyone  can  learn  for  himself,  that 
often,  when  one  has  been  elected  to  office,  w^hether  as 
a  United  States  Senator  or  to  a  lower  grade,  under  the 
present  monopoly-boss  system,  his  actions  if  not  his 
words  imply  that  he  considers  the  office  to  which  he  has 
been  elected  a  personal  thing  of  value,  allotted  to  him 
by  his  party  in  return  for  party  aid.  This  aid  may 
consist  either  of  service,  or  money,  or  both.  He  feels 
under  only  slight,  if  any,  obligation  to  the  general  com- 
munity. At  any  rate,  he  takes  the  mandates  which 
issue  from  the  inner  councils  of  his  own  party  as  the 
full  measure  of  official  duty,  never  stopping  to  in- 
vestigate as  to  the  motives  behind  such  mandates,  and 
often  being  well  aware  that  they  are  not  only  un- 
patriotic but  positively  corrupt,  and  the  measures  pro- 
posed inimical  to  the  interests  of  the  people  of  his 
State.  Beyond  obedience  to  partisan  dictation,  he  con- 
siders the  office  as  his  own  private  perquisite,  and  so 
uses  it.  If  he  be  a  lawyer,  and  the  fact  that  he  holds 
the  office  constitutes  a  special  recommendation  to  some 
financial  power  for  his  employment  as  its  silent  attor- 
ney, he  looks  upon  the  retainer  as  one  of  the  perquisites 
of  the  office  belonging  to  himself,  and  thereafter  feels 
about  as  free  to  vote  against  his  employer's  interest  as 
a  juror  would  if  called  upon  to  return  a  verdict  against 
his  bosom  friend  in  a  debatable  case.  Although  he 
may  be  a  skinflint  and  a  cheeseparer  with  respect  to  his 
own  property,  he  will  not  hesitate  to  vote  away  public 
money  upon  legislative  schemes  of  doubtful  honesty, 
and  sometimes  of  obvious  impropriety.  Look  at  the 
junketing  trips  planned  during  each  session  to  enable 
large  committees  to  make  long  midsummer  journeys, 
ostensibly  to  investigate  some  subject  of  governmental 

88 


MONOPOLY-BOSS    PARTNERSHIP 

importance,  but  really  to  give  Cabinet  officers,  repre- 
sentatives, and  senators  and  their  families  extravagant 
vacation  outings  at  the  people's  expense.  For  instance, 
the  session  which  closed  March  4,  1905,  provided  for 
the  following  junkets:  A  trip  by  the  Committee  on 
Rivers  and  Harbors  to  the  West  Indies,  on  a  govern- 
ment transport;  entertainment  of  a  party  of  Congress- 
men and  senators  in  Cuban  waters  by  Secretary  of  the 
Navy  Morton;  an  excursion,  not  by  congressional 
authority,  but  by  what  has  been  fittingly  termed  "  Ex- 
ecutive usurpation,"  of  department  officials,  senators, 
and  representatives,  in  charge  of  Secretary  of  War 
Taft,  to  the  Philippines  and  other  Oriental  countries ; 
a  party  of  five  carloads  across  the  continent  to  Port- 
land, Ore.,  to  attend  the  opening  of  the  Lewis  and 
Clarke  exposition,  costing  the  Government  many  thou- 
sands of  dollars.  Just  imagine,  if  you  can,  such  things 
permitted  during  the  administration  of  Washington, 
Jefferson,  Jackson,  or  Lincoln. 

The  United  States  Senate  may  convene  and  ad- 
journ, its  members  may  speak  to  empty  seats,  prayer 
may  be  offered  by  the  chaplain,  and  the  record  publicly 
made  at  preceding  sessions  may  be  revised — all  this  may 
be  done  without  consulting  the  party  boss  of  the  majority 
side.  But  no  decisive  vote  can  be  taken  on  any  measure 
affecting  directly  or  indirectly  any  important  Wall 
Street  interest  until  he  has  viseed  it,  and  it  has  been 
passed  upon  by  certain  corporate  directorates  repre- 
sented by  him.  There  every  measure  affecting  any  im- 
portant business  interest  of  the  country  is  considered, 
and  orders  given  by  the  boss  to  his  party  following  in 
the  Senate.  They  are  satisfied  with  being  considered 
"  good  organization "  men.  It  is  not  often  that  a 
senator  kicks  over  the  traces  and  votes  against  the  man- 
date of  "  the  organization."  Nor  is  this  condition  con- 
fined to  the  Republican  side.  There  usually  is  a  Demo- 
4  39 


BOSSISM    AND    MONOPOLY 

cratic  senatorial  representative  of  beneficiaries  of  special 
legislation  controlling  in  the  same  way  a  small  coterie 
of  Democratic  senators,  and  voting  them  on  the  mo- 
nopoly side  in  support  of  "  sane  and  safe  "  policies. 

The  press  does  much  to  keep  before  the  public  the 
shortcomings  and  misdeeds  of  bosses  and  party  leaders 
under  the  cloak  of  party  organization ;  but  the  benefi- 
cial effect  of  it  all  as  an  influence  to  awaken  attention 
and  direct  effort  to  reform  abuses  is  to  a  large  extent 
nullified  by  the  large  amount  of  space  allotted  to 
sketches  of  personal  interviews  with  them,  and  small 
talk  as  to  their  every  movement,  incomings,  and  out- 
goings. The  boss  is  thus  afforded  several  arguments, 
very  convincing  to  an  unscrupulous  man,  to  persist  in 
his  course.  He  sees  himself  the  obsei'ved  of  all  ob- 
servers, feels  his  vanity  fed  to  repletion,  his  wrong- 
doing condoned  and  attributed  to  a  spirit  of  zeal  for 
party,  by  that  very  community  whose  interests  he  has 
betrayed  and  whose  laws  he  has  violated.  After  a 
period  in  which  Boss  Jobbs  has  been  advertised  as  going 
with  his  family  to  a  summer  resort,  including  a  pen 
picture  of  happy  domestic  life,  a  hint  of  his  secret 
charities,  and  a  reference  to  instances  of  his  fidelity 
to  friends,  the  same  paper  comes  out  with  startling 
headlines  attributing  to  him  a  design  to  put  up  a  slate 
of  his  political  chattels  for  public  office,  and  through 
them  give  away  valuable  franchises  or  otherwise  sacri- 
fice public  interests. 

Is  it  any  wonder  that  so  little  attention  is  paid  to 
the  "  grand  expose  "?  Readers  remenibor  some  of  the 
good  things  the  paper  has  been  saying  about  Jobbs, 
and  incline  to  discredit  the  attack,  and  to  suspect  that 
it  is  inspired  by  rival  factions,  or  that  it  is  merely  a 
space-filling  and  circulation-increasing  scheme.  The 
thoughtful  element  so  regard  it,  and  the  large  indiffer- 
ent and  listless  element  give  it  no  thought,  and  the  only 

40 


MONOPOLY-BOSS    PARTNERSHIP 

net  result  is  to  advertise  Jobbs  and  give  him  increased 
prestige  and  influence  among  his  own  partisans. 

During  a  national  campaign  the  trust  financiers, 
while  pretending  to  be  simply  attending  to  their  private 
affairs,  usually  find  time  enough  to  give  stanch 
support  to  the  party  whose  candidates  promise  to  be 
the  most  subservient  and  whose  policies  are  most  fa- 
vorable to  their  interests.  In  local  politics  they  are 
with  the  dominant  party,  if  the  latter  gives  them  "  a 
square  deal  " — that  is  to  say,  allows  them  to  fix  the 
sum  of  taxes  they  pay,  grants  them  all  the  public 
franchises  they  seek,  and  a  free  hand  in  robbing  the 
people  as  public  service  corporations.  If  the  dominant 
local  boss  and  his  party  become  refractory  and  at  any 
time  refuse  to  grant  the  principal  demands  of  the 
monopolists,  the  latter  threaten  to  finance  the  opposition 
boss  and  his  party,  and  install  them  in  power.  And  the 
monopolists  are  usually  able  to  do  this  by  reason  of 
the  presence  of  many  purchasable  votes,  the  ability  to 
provide  a  large  corruption  fund,  and  the  disorganized 
condition  and  partisan  prejudices  of  honest  voters. 

It  may  thus  happen  that  a  minority  party  may  go 
into  power  occasionally,  but  it  is  only  for  one  term. 
The  loss  incident  to  loss  of  control  is  in  the  form  of 
boodle,  a  great  financial  loss  to  the  boss  of  the  dominant 
party  and  his  subordinates,  not  to  mention  the  offices, 
patronage,  and  petty  graft.  In  such  instances  it  has 
cost  the  monopolists  a  great  deal  more  to  put  in  power 
the  minority  boss  than  to  have  acquiesced  in  the  usual 
order.  So  that  when  the  next  municipal  campaign 
comes  around  the  combination  between  the  monopolists 
and  the  majority  boss  is  apt  to  be  more  far-reaching 
with  reference  to  the  exploitation  of  the  public  than  ever 
before.  The  monopolists  will  wish  to  recoup  the  great 
cost  of  putting  in  power  the  minority  boss  at  the  preced- 
ing election,  and  the  majority  boss  will  wish  to  recoup 

41 


BOSSISM    AND    MONOPOLY 

the  still  greater  losses  of  being  out  of  power.  The  boss 
and  the  corporation  lawyer  and  multiples  of  them  con- 
stitute what  is  popularly  designated  as  the  political 
party  locally  and  nationally.  Committeemen  and  can- 
didates are  mere  pawns  in  the  game.  Their  conscien- 
tious convictions  and  honest  opinions,  when  they  have 
any,  count  for  nothing  where  the  corporation  is  or  may 
become  financially  interested;  and  the  corporation  is  al- 
ways interested  in  politics.  Of  course  there  are  many 
subjects  of  legislation  in  which  they  have  no  direct 
interest.  These  afford  opportunities  for  posing  in  the 
name  and  in  the  ostensible  interest  of  the  dear  people. 
Here,  the  official  tool,  whether  in  an  executive,  judicial, 
or  legislative  office,  is  a  free  agent,  if  one  who  has  sold 
himself  to  such  masters  and  stultified  himself  before  God 
and  man  can  be  free  in  any  true  sense. 

Look  about  you,  whether  you  reside  in  Philadelphia, 
New  York,  or  San  Francisco,  or  in  a  rural  community, 
and  if  you  are  not  a  political  boss,  great  or  small,  or 
a  corporation  servant,  or  in  some  way  one  of  a  small 
coterie  in  charge  of  a  political  machine,  then  say  .how 
much  your  influence  counts  in  the  organization  and 
direction  of  a  political  campaign,  local.  State,  or  na- 
tional. Let  us  suppose  you  are  a  young  man  ambitious 
to  win  place  and  fame  in  politics.  Let's  see  what  you 
will  do  and  what  will  happen  to  you.  You  consult  your 
friends  first.  If  they  are  wise  they  will  dissuade  you. 
But  usually  they  are  not;  so  they  will  encourage  and 
pledge  their  support.  If  you  are  well  posted  you  may 
know  that  their  pledges  are  worthless  unless  you  "  make 
good  "  with  the  boss  and  his  silent  partner,  the  corpora- 
tion lawyer.  If  you  neglect  to  make  known  your  am- 
bition to  the  boss,  either  in  person  or  through  some 
one  "  standing  in "  with  him,  your  candidacy  will 
amount  to  no  more  than  the  gentlest  zephyr.  It  will 
vanish   and   leave   no    vacancy.      The    convention,   the 

42 


MONOPOLY-BOSS    PARTNERSHIP 

aggregation  of  patriots  who  have  hired  themselves  to 
become  delegates  for  some  cheap  bribe,  such  as  a  rail- 
road pass,  will  simply  ignore  your  candidacy. 

But  we  will  suppose  you  have  seen  the  boss  and  he 
has  "  looked  you  over,"  and  he  and  the  silent  partner 
have  held  an  executive  session  on  "  the  slate."  Then 
just  two  matters,  and  no  more,  are  considered  with 
reference  to  your  candidacy.  First,  your  availability; 
that  is,  your  vote-getting  capacity  as  compared  to 
that  of  others  wanting  the  nomination ;  and,  secondly, 
your  utility  as  a  corporation  tool  after  election.  You 
need  have  no  fear  of  your  tender  sensibilities  being 
shocked.  The  smooth  boss — outwardly  a  gentleman — 
will  say  to  you,  "  Charley,  it  is  well  that  we  understand 
each  other  now,  because  we  will  wish  to  remain  good 
friends.  I  recognize  you  as  a  young  man  of  talent 
and  you  have  a  bright  future  if  you  will  only  act  with 
gumption.  You  will  if  elected  be  expected  to  act  con- 
servatively and  not  be  cranky.  The  country  is  full 
of  reformers,  not  one  of  whom  nor  any  number  to- 
gether could  ever  obtain  a  nomination  for  you,  or  give 
you  a  hundred  votes  after  your  nomination.  They 
will  assail  you  with  importunities,  resolutions,  and  peti- 
tions for  this  and  that  and  the  other  thing  in  the 
cause  of  morality,  and  for  this,  that,  and  the  other 
form  of  interference  with  the  business  of  private  cor- 
porations. Now  the  corporations  only  want  a  square 
deal,  and  you  must  not,  at  the  proper  time,  refuse  to 
give  it  to  them.  If  you  will  act  reasonably  and  stand 
by  me  and  the  organization  in  this  matter  we  will 
stand  by  you  and  among  us  all  you  will  be  taken  care 
of  and  well  provided  for."  If  you  are  an  alert  and 
lieroic  young  man  you  will  understand  all  this.  You 
will  avoid  even  the  appearance  of  evil  and  refuse  the 
nomination  linked  up  with  such  a  pledge.  The  chances 
are  about  ten  to  one  that  you  will  yield  and  promise. 

43 


BOSSISM    AND    MONOPOLY 

If  you  assert  your  manhood,  and  refuse  to  be  tied  up 
even  thus  vaguely,  the  chances  are  ten  to  one  you  will 
lose  the  nomination.  Sometimes,  however,  the  boss, 
who  is  not  a  scoundrel  from  choice  but  from  "  en- 
lightened self-interest,"  puts  a  few  good  men  on  the 
ticket  for  a  variety  of  reasons. 

It  has  often  been  said  that,  at  any  rate,  the  masses 
are  honest,  and  that  when  they  have  been  educated  up 
to  it  they  will  see  that  wrongs  are  righted.  That  would 
be  true  were  it  not  for  the  curse  of  party  rule.  Not 
even  the  delusion  that  there  is  some  such  relation  as  mem- 
bership in  a  party,  and  that  members  are  under  moral 
obligations  to  vote  a  certain  party  ticket,  would  be  fatal 
to  reform  were  it  not  for  corporation-boss  rule  which  has 
become  universal  during  the  last  few  decades,  spreading 
itself  over  the  body  politic  as  the  leprosy  spreads  over 
the  body  of  its  victim. 

Another  difficulty  in  the  way  of  progress  toward 
the  solution  of  the  economic  and  political  problems  of 
our  times  is  the  literal  sense  in  which  many  are  prone 
to  accept  the  teachings  of  great  men  of  other  times. 
For  instance,  Jefferson  said  many  things  which,  if  his 
environment,  and  the  conditions  of  society  at  the  time 
he  wrote  be  not  considered,  may  be  quoted  against  in- 
terference on  the  part  of  the  Government  with  the 
alien  powers  which  have  sprung  up  from  the  same  soil 
with  liberty  and  grown  until  the  very  existence  of  lib- 
erty is  endangered.  He  was  opposed  to  legislation  that 
unnecessarily  restrained  individual  action,  and  al- 
though there  were  no  monopolies  of  which  the  people 
complained,  yet  he  foresaw  such  grave  possibilities  in 
their  future  existence  that  he  very  reluctantly  con- 
sented to  the  granting  of  patents  for  inventions.  So 
much  did  he  fear  the  establishment  of  the  principle  of 
monopoly  in  the  granting  of  patents  that  he  insisted 
upon  strict  limitations.     While  Jefferson  was  opposed 

44 


MONOPOLY-BOSS    PARTNERSHIP 

to  hampering  the  individual  with  respect  to  legitimate 
enterprises,  yet  he  clearly  showed  that  one  man's  right 
ended  where  another's  began;  and  it  would  be  difficult 
to  conceive  of  his  upholding  the  right  of  men  to 
form  and  maintain  combinations  destructive  of  common 
right.  There  were  no  railroads  in  his  day,  but  if  he 
lived  to-day  does  anyone  believe  he  would  deny  to 
government  the  power  to  do  all  that  is  necessary  to 
prevent  the  impoverishment  and  ruin  of  millions  of 
people  in  order  that  a  few  may  accumulate  colossal 
wealth  through  high  rates,  rebates,  and  discriminations? 
While  he  opposed  paternalism,  he  never  said  anything 
to  indicate  that  the  people  might  not  give  sufficient 
strength  to  their  government  to  suppress  any  power, 
whether  internal  or  external,  which  threatened  their 
liberties  and  welfare. 

Jefferson  was  a  conservative,  but  not  an  ultra-con- 
servative. Conservatism !  How  many  civic  sins  of 
omission  have  been  committed  in  thy  name !  As  a  word 
having  a  broad  significance,  it  often  is  made  to  serve  the 
purposes  alike  of  the  demagogue  and  obstructionist. 
There  is  a  conservatism  which  turns  to  profitable  ac- 
count the  truths  established  in  the  schools  of  experience, 
and  another  conservatism  which  accepts  all  the  dogmas 
of  general  acceptance  and  practice,  whether  grounded 
upon  truth  or  error.  To  the  latter  character  of  con- 
servatism, only  the  following  description  is  intended  to 
be  applicable. 

Your  conservative  is  a  stickler  for  the  observance, 
without  change,  of  such  laws,  written  and  unwritten,  as 
were  in  force  when  he  first  began  the  study  of  laws 
from  the  standpoint  of  citizenship,  even  if,  for  the  want 
of  change,  evils  have  sprung  up  and  grown  until  such 
laws  are  neutralized;  he  dotes  upon  orderly  procedure 
and  stagnation ;  his  speech  is  that  of  the  temporizer 
and    apologist ;    he    decries    optimism    and    progressive 

45 


BOSSISM   AND    MONOPOLY 

ideas  as  fads  and  dangerous  delusions.  Hoping  for  no 
improvement,  desiring  no  change,  he  suggests  nothing 
for  the  voter  to  do  except  to  ascertain  what  are  exist- 
ing conditions,  and  conform  himself  and  his  conduct 
thereto  without  inquiring  whether  they  are  the  best 
possible,  but  only  whether  they  had  the  approval  of 
some  one  of  recognized  authority  at  a  former  period. 
If  such  consen^atives  as  some  of  those  recently  promi- 
nent in  political  life  in  the  United  States  could  have 
their  way,  not  only  would  there  be  a  continuous  aug- 
mentation of  wealth  in  the  hands  of  the  monopolists 
who  now  hold  the  Government  by  the  throat  and  a 
corresponding  progressive  impoverishment  of  the  peo- 
ple, but  our  political  literature  would  cease  to  be  worth 
reading,  because  it  would  consist  of  a  mere  recital  of 
past  achievements  and  a  labored  attempt  to  fit  worn- 
out  and  antiquated  theories  to  changed  conditions.  The 
main  trouble  with  such  men  is  that  they  lack  originality 
of  political  thought,  and  don't  understand  the  true 
theory  of  democratic  government.  They  do  not  see 
that  that  which  breeds  abnormal  prosperity  for  those 
with  whom  they  come  in  contact  also  breeds  abnormal 
poverty  and  distress  among  those  whom  they  never 
meet.  Existing  conditions  profit  them  and  their  asso- 
ciates ;  therefore  they  are  the  best  for  all.  Their 
thoughts  and  conversation  all  refer  to  the  strength  and 
beauty  of  the  status  quo;  beyond  that  they  make  no 
inquiry.  According  to  their  view  an  income  tax  would 
be  a  wicked  innovation,  the  curtailment  of  the  privileges 
now  enjoyed  by  monopoly  an  inexcusable  interfer- 
ence by  the  Government  with  the  rights  of  property; 
and  government  ownership  is  looked  upon  by  them  as 
an  upturning  of  the  foundations  of  representative  gov- 
ernment— rank  revolution.  They  refuse  support  to  any 
measure  calculated  to  relieve  the  existing  situation,  be- 
cause they  refuse  to  see  in  that  situation  any  cause  for 

46 


MONOPOLY-BOSS    PARTNERSHIP 

alarm.  Of  course  they  cannot  see  it,  because  they  travel 
through  life  in  parlor  cars,  as  it  were,  looking  out  with 
utter  indifference  upon  the  multitude.  So  long  as  all 
is  cheerful  and  prosperous  inside,  they  cannot  compre- 
hend how  it  possibly  could  be  any  different  outside. 
The  conservative  is  forever  quaking  lest  some  prece- 
dent be  overthrown.  He  is  trained  to  glide  in  precedent- 
worn  grooves ;  his  timid  soul  shrinks  from  change  as  a 
ground  hog  or  a  night  bird  from  the  sunlight.  Seeing 
all  virtue  in  things  as  they  are,  any  suggestion  for  a 
change  is  radicalism,  which  he  despises  because  the 
antithesis  of  conservatism.  He  is  afraid  to  follow  con- 
science lest  it  lead  away  from  the  beaten  track  of  prec- 
edent; and  he  would  not  follow  the  radical  though  the 
latter  showed  him  a  new  route  to  his  destination  which 
was  miles  and  miles  shorter  than  the  old  way.  His 
reasoning  proceeds  not  from  premise  to  conclusion,  but 
along  a  line  of  precedents  from  antiquity  to  the  pres- 
ent; therefore  the  future.  That  only  is  to  him  a  com- 
mon-sense view  which  has  been  the  customary  view  of 
his  predecessors ;  and  if  he  cannot  find  a  precedent  he 
conforms  his  conclusion  as  nearly  as  possible  to  some 
analogous  time-worn  theory,  however  disastrous  it  may 
be  shown  to  have  been  when  practically  tested. 

But  the  intelligent,  reasonable,  and  reasoning  radi- 
cal is  the  man  who  digs  up  the  truth  from  beneath  the 
burdened  sod  of  precedent  and  prejudice.  He  is  the 
real  benefactor  of  his  race,  who  makes  history,  and 
is  remembered  for  having  left  the  world  better  than  he 
found  it.  Moses  was  a  radical,  so  were  Patrick  Henry 
and  Abraham  Lincoln.  All  these  were  ready  to  approve 
and  follow  a  precedent  based  upon  reason,  but  each  was 
ready  to  stand  against  the  whole  world  of  precedent- 
incrusted  error.  Each  had  the  courage  of  his  convic- 
tions, and  yet  not  one  of  them  was  obstinate  and  big- 
oted, like,  for  instance,  a  "  conservative  editor "  or  a 

47 


BOSSISM    AND    MONOPOLY 

present-day  senator.  Though  our  ancestors  may  have 
done  a  thing  the  same  way  a  thousand  times,  when  we 
once  discover  that  their  way  was  wrong,  it  is  our  duty 
and  privilege  to  correct  the  mistake  and  do  it  the  right 
way.  Conservatism,  in  the  obnoxious  sense,  and  its  twin 
brother,  selfishness,  have  kept  the  people  of  this  nation 
out  of  their  own  for  a  long  time,  but  will  not  be  able  to 
do  so  much  longer.  Such  conservatism  is  the  dry  rot  of 
civilization. 

There  are  two  classes  of  conservatives,  the  honest 
but  obstinate,  and  the  dishonest.  The  obstinate  con- 
servative believes  in  maintaining  the  present  status  even 
in  the  face  of  obvious  evils  inherent  in  present  condi- 
tions. He  maintains  a  do-nothing  attitude  against  all 
suggestions  for  reform  while  admitting  the  existence 
of  great  evils.  While  he  prides  himself  on  his  obstinacy, 
which  he  calls  steadfastness  and  consistency,  he  is  in 
reality  a  timeserver.  He  prefers  to  endure  present 
evils  to  risking  a  change,  as  to  which  he  distrusts  his 
own  judgment  as  well  as  that  of  other  persons.  And 
when  conditions  become  much  worse  under  the  system 
he  adheres  to,  then  he  assigns  the  evil  attending  such 
conditions  to  some  other  cause  than  the  true  one.  He 
does  this  for  the  sake  of  consistency  and  to  avoid  the 
trouble  of  investigating  for  himself. 

The  dishonest  conservative  does  not  permit  thought 
to  enter  into  the  foundations  of  his  opinion  at  all.  He 
is  receiving  a  profit,  or  enjoys  an  unfair  advantage 
under  and  from  the  effect  of  existing  laws  and  condi- 
tions, and  self-interest  being  his  only  rule  of  action 
arguments  on  any  other  line  all  go  wide  of  their  des- 
tination. 

The  term  conservative  is  euphonious  and  seductive. 
It  suggests  at  once  a  lover  of  repose  and  regularity. 
Your  conservative  is  never  disturbed  by  any  danger  of 
a   social   or  industrial   upheaval,   however   imminent   or 

48 


MONOPOLY-BOSS    PARTNERSHIP 

convincingly  disclosed.  He  is  a  man  of  many  words 
of  little  meaning.  He  discusses  all  public  questions 
from  a  counting-house  or  stock-market  standpoint. 
For  instance,  Judge  Grosscup,  who,  presiding  in  the 
Federal  Court  at  Chicago,  granted  injunctions  against 
the  beef -packing  conspirators  and  then  failed  to  enforce 
them,  delivers  a  lecture  on  the  thrilling  and  exalting 
subject  of  "  trust  financing."  He  accepts  the  present 
financial  and  industrial  status  as  final  and  satisfactory, 
and  merely  seeks  the  removal  of  certain  difficulties  in 
the  way  of  investors  in  trust  stocks.  And  his  visual 
point  is  about  as  high  as  is  ever  reached  by  the  con- 
servative type  of  publicists.  The  interests  of  those 
who  toil  and  those  who  pay  monopoly  prices  are  be- 
neath his  political  horizon.  He  holds  a  life  job;  he 
is  upon  good  terms  socially  with  the  financiers;  he  be- 
lieves, too,  in  maintaining  order  at  any  cost,  as  is  evi- 
denced by  his  issuance  of  injunctions  in  1894  to  restrain 
free  speech.      In  short,  he  is  a  conservative. 

The  tendency  during  three  decades  has  been  to  the 
establishment  in  practice  here  of  the  absolute  rule  of 
plutocracy,  from  which  our  ancestors  sought  to  escape ; 
and  from  which  some  people  still  delude  themselves  with 
the  belief  that  we  are  still  exempt. 

It  is  a  false  doctrine  that  men  of  superior  intelli- 
gence, strength,  and  wealth  may  honestly  form  what- 
ever combinations  they  please,  and  with  or  without 
secret  arrangements  with  other  combinations  or  indi- 
viduals ;  by  manipulation  of  rates  for  transportation 
and  of  markets ;  by  reducmg  the  wages  of  labor ;  by  ar- 
tificially maintaining  high  prices ;  by  selecting  those  who 
shall  falsely  pretend  to  represent  the  people  in  office, 
appropriate  all  of  the  profits  of  business  which  would 
otherwise  remain  for  general  appropriation  and  divi- 
sion. The  opposite  doctrine,  that  it  is  the  duty  of  gov- 
ernment   to    legislate    according    to    the    spirit    of   the 

49 


BOSSISM    AND    MONOPOLY 

maxim  salus  populi  est  suprema  lex  (the  safety  of  the 
people  is  the  supreme  law),  is  not  new;  it  is  not  social- 
istic. It  lies  at  the  foundation  of  democracy.  It  is 
JefFersonian,  notwithstanding  the  conflicting  interpre- 
tations placed  upon  the  teachings  of  that  philosopher 
and  statesman  according  to  the  interest  and  viewpoint 
of  those  who  pretend  to  be  true  democrats.  Nor  is 
any  law  which  would  preserve  the  masses  from  trust 
oppression,  from  destitution  and  serfdom,  open  to  the 
objection  that  it  centralizes  too  much  power  in  the 
Federal  Government.  Centralization  is  a  term  which 
has  no  place  in  this  discussion.  The  centralization  of 
which  the  people  of  the  States  have  complained,  and 
to  which  they  will  continue  to  object,  is  unconstitutional 
and  unnecessary  assumption  by  the  Federal  authorities 
of  State  sovereignty.  But  the  objection  cannot  be 
urged,  either  by  the  production  of  anything  Jefferson 
ever  said  or  implied,  or  upon  any  true  principle  or 
theory  of  our  system,  against  the  exercise  of  Federal 
authority  pursuant  to  adequate  legislation  for  the  sup- 
pression of  evils  with  which  the  States^  lack,  constitu- 
tionally, or  in  the  nature  of  things,  the  power  to  cope. 
A  proper  conception  of  true  democracy  does  not 
imply  a  government  in  which  are  enacted  only  criminal 
statutes  and  statutes  for  the  protection  of  the  possessors 
of  wealth.  It  implies  the  enactment  of  all  such  laws 
as  are  necessary  to  protect  the  many  weak  and  lame 
in  the  race  of  life  from  conspiracies  by  the  cunning, 
avaricious,  and  dishonest  few.  It  does  not  imply  un- 
limited freedom  of  the  individual  in  the  accumulation  of 
wealth  any  more  than  in  his  physical  conduct  toward 
fellow  members  of  society.  Indeed,  there  is  no  limit  to 
the  duty  of  government  to  prevent  wrong,  no  matter  in 
what  form  the  wrong  is  shown  to  exist.  Nor  is  there 
in  the  exercise  of  such  power,  to  the  full  limit,  anything 
inconsistent  with  representative  government. 

50 


MONOPOLY-BOSS    PARTNERSHIP 

One  of  the  stock  arguments  against  the  provision 
and  enforcement  of  any  effective  remedy  against  the 
rapacious  exploitations  by  monopoly  is  that  of 
"  cheapness."  It  is  expressed  in  various  forms  of 
speech,  but  usually  is  presented  in  the  form  of  a  scale 
of  comparative  prices — a  comparison  of  charges  for 
merchandise  or  transportation  at  the  present  and  at 
some  previous  date.  We  might  well  reply  to  all  this 
with  the  questions  asked  by  Mr.  Lloyd  in  an  able  refu- 
tation of  the  same  clrims  of  the  monopolists:  "Shall 
we  buy  cheap  of  Captain  Kidd  and  shut  our  ears  to 
the  agony  that  rustles  in  his  silks.''  Shall  we  believe 
that  Captain  Kidd,  who  kills  commerce  by  the  act  which 
enables  him  to  sell  at  half  price,  is  a  cheapener.''  Shall 
we  preach  and  practice  doctrines  which  make  the  black 
flag  the  emblem  of  success  oij  the  high  seas  of  human 
interchange  of  service,  and  complain  when  we  see  man- 
kind's argosies  of  hope  and  plenty  shrink  into  private 
hoards  of  treasure,  buried  in  selfish  sands  to  be  lost 
forever,  even  to  cupidity.?  " 

The  relation  assumed  by  governments  in  the  United 
States  to  public  service  corporations  of  guarantors  of 
profits  (dividends)  or  even  of  their  solvency  (income 
sufficient  to  meet  expenses  and  interest  on  indebtedness) 
is  abnormal  and  anomalous.  Its  recognition  and  as- 
sumption as  a  policy  or  obligation  is  of  itself  the 
granting  of  a  special  privilege,  the  extent  and  ultimate 
effect  of  which  can  scarcely  be  calculated.  If  persisted 
in,  there  can  be  but  one  result,  the  absorption  by  the 
never-dying  entities  which  own  these  privileges  of  the 
corpus  of  all  property,  leaving  the  great  mass  of  mortal 
men  in  a  state  of  vassalage  and  dependence.  But  the 
courts  have  firmly  established  that  policy  and  obliga- 
tion and  the  only  alternative  is  government  ownership. 

Another  stock  argument  is  an  appeal  to  the  masses 
to  respect  "  vested  rights."    Now  that  is  a  relative  term. 

51 


BOSS  ISM    AND    MONOPOLY 

It  is  often  employed  in  Congress,  State  legislatures, 
municipal  councils,  and  courts  to  bar  the  public  from 
their  own.  But  when  a  thing  is  stolen  or  obtained  by 
fraud  or  financial  jobbery,  or  granted  corruptly  by 
subsidized  lawmakers  without  any,  or  upon  inadequate, 
consideration,  it  cannot  be  said,  in  any  true  sense  of  the 
term,  ever  to  have  vested  at  all. 


52 


CHAPTER    III 

POPULAR   APATHY,  AND   DUTY   OF   THE    PEOPLE   HEREIN 

A   PLEA   FOR   RADICAL   ACTION 

"  I  have  studied  autocracy  in  Russia,  and  theocracy  in  Rome,  and 
I  must  say  that  nowhere  have  I  struck  more  abject  submission  to  a 
more  soulless  despotism  than  that  which  prevails  among  the  masses  of 
so-called  free  American  citizens  when  they  are  face  to  face  with  the 
omnipotent  power  of  corporations." — William  T.  Stead. 

The  immensity  of  the  country  and  the  great  diver- 
sity of  interests  represented  by  its  population,  while  an 
element  of  industrial  and  commercial  strength,  is  a  con- 
stantly growing  influence  of  political  disintegration. 
Concerted  action  among  the  people,  with  a  common  in- 
spiration or  motive,  is  simply  an  impossibility.  The 
people  of  Kansas  may,  in  circumstances  of  peculiar 
aggravation,  resort  to  radical  action  against  the  Stand- 
ard Oil  monopoly,  and  if  they  persisted,  and  if  the 
same  conditions  existed,  and  the  effect  of  the  exercise 
of  monopoly  power  upon  the  interests  and  minds  of 
other  commonwealths  were  the  same,  the  spirit  of  revolt 
might  spread  to  at  least  a  majority  of  the  people.  But 
even  in  the  adjoining  States,  the  oil-producing  interests 
are  small  or  non-existent,  and  the  argument  by  the 
trust,  and  by  its  political  and  other  agents,  that  oil 
is  of  better  quality  and  cheaper  than  heretofore  is  suf- 
ficient to  quell  popular  clamor,  if  not  entirely  satisfac- 
tory. Little  attention  is  paid  to  the  Kansas  commo- 
tion in  the  great  cities  of  New  York,  Boston,  Chicago, 
Philadelphia,  St.  Louis,  and  San  Francisco,  where  oil 
retails  at  fifteen  to  twenty  cents  per  gallon,  except  as 

53 


BOSSISM    AND    MONOPOLY 

a  mere  matter  of  news.  Perhaps  in  some  Southern 
States  the  pinch  of  the  monopoly  may  be  felt,  but  con- 
temporary with  the  Kansas  crusade  an  acute  stage  of 
the  negro  problem  may  be  up  for  solution  and  the 
monopoly  question  is  scarcely  thought  of.  So  the 
civil  war  between  capital  and  labor  which  raged  for  a 
whole  year  in  Colorado  received  but  scant  attention  in 
other  States,  even  among  the  organizations  of  union 
labor.  So  with  the  anthracite  coal  strike  in  Pennsyl- 
vania. Civil  war  in  Pennsylvania  and  a  devastating 
coal  famine  for  many  cities  were  only  averted  by  reso- 
lute and  timely  interference  by  the  President,  but  this 
failed  to  create  excitement,  or  even  a  general  and  in- 
tense interest  in  sections  and  communities  other  than 
those  immediately  interested.  The  people  of  the  great 
cities  on  the  Atlantic  coast  and  of  the  Central  region 
are  still  paying  trust  prices  for  coal  without  any  gen- 
eral, at  any  rate  without  an  organized,  protest.  They 
are  tamely  submitting.  Widespread  expression  of  dis- 
content with  reference  to  oppressive  railway  rates  and 
extortionate  trust  exactions  have  been  heretofore  as 
transitory  and  ineffective  as  those  that  were  local.  For 
three  years  or  more  there  has  existed  in  this  country  a 
combination  among  meat  packers  which  controlled  not 
only  fresh  meats  but  nearly  all  food  products,  being 
greatly  aided  if  not  made  possible  by  railroad  discrimi- 
nation in  its  favor.  It  reduced  the  prices  of  live  stock, 
fruits,  and  vegetables  in  first  hands,  and  enormously 
increased  the  prices  that  consumers  had  to  pay  for 
those  essentials  of  life  in  every  direction.  From  the 
tone  and  volume  of  denunciation  hurled  at  the  meat 
trust  since  it  was  formed,  one  not  conversant  with  our 
ways  would  suppose  that  any  administration  which  re- 
fused to  subordinate  all  other  issues  to  this  great  trust 
issue  must  necessarily  be  swept  out  of  power  by  an 
irresistible  popular  uprising.     And  the  vital  and  far- 

54 


A    PLEA    FOR    RADICAL    ACTION 

reacliing  importance  of  the  issue  of  whether  that  one 
monopoly  should  continue  or  should  be  destroyed  would 
have  warranted  the  people  in  ignoring  all  others  in  the 
campaign  of  1904.  But  strange  to  relate,  as  if  by 
mutual  consent,  overriding  the  true  interests  of  party 
constituencies,  the  "  Beef  Trust "  continued  its  opera- 
tions and  extortions,  and  the  railway  continued  to  favor 
it  all  during  that  campaign,  and  the  political  sharps  of 
both  parties  diverted  the  attention  of  the  people  there- 
from to  such  matters  as  tariff  schedules,  concerning 
which  there  was  no  difference  of  opinion  except  as  to 
which  party  should  be  intrusted  with  the  duty  of  re- 
vision, and  to  irrelevant  personal  traits  of  the  re- 
spective candidates. 

There  has  not  been  a  line  of  effective  anti-trust 
legislation  by  Congress  for  fifteen  years.  There  was 
one  court  decision  which  some  credulous  people  sup- 
posed was  a  crushing  blow  to  the  "  Beef  Trust."  But 
behold!  the  same  combination  still  exists,  the  sand- 
bagging of  producers  and  robberies  of  consumers  go 
on,  without  abatement  or  diminution.  In  fact,  just  to 
show  its  contempt  for  the  Supreme  Court,  the  trust 
raised  the  price  of  meat  to  retailers  an  average  of  one 
cent  per  pound  within  a  week  after  the  decision  by  that 
court  in  the  injunction  case  appealed  from  Chicago. 

In  New  England  the  interest  of  the  populace  is 
kept  alive  with  reference  to  reciprocity  with  Canada  and 
the  price  of  leather  fixed  by  the  "  Leather  Trust  " ;  in 
California  the  fear  of  Chinese  and  Japanese  intinision 
absorb  the  public  interest,  until  an  election  approaches, 
that  being  the  only  occasion  when  they  should  attract 
attention — and  then  they  are  forgotten;  in  Wisconsin 
high  rates  and  discriminations,  as  well  as  legislative 
corruption,  attributable  to  railroad  lobbyists,  have 
proven  sufficient  to  create  a  temporary  diversion ;  in 
Kansas  and  Texas  the  people  are  waging  fruitless 
5  55 


BOSS  ISM    AND    MONOPOLY 

Avar  against  the  Standard  Oil  Company,  and  in  the 
Southern  States  they  have  the  low  price  of  cotton  and 
the  question  of  social  equality  with  the  negro  always 
before  them.  Everywhere  the  people  are  feeling  the 
pinch  of  monopoly  power,  and  have  a  vague  but 
groundless  notion  that  the  Government  at  Washington 
is  doing  all  it  can,  and  is  likely  to  really  do  something 
for  their  relief.  But  nowhere  is  there  any  consensus  of 
opinion  as  to  the  identity  of  the  wrongdoers,  or  as  to 
what  remedy  should  be  applied,  or  how. 

One  of  the  things  that  those  enlisted  in  the  war  of 
emancipation  from  boss  and  monopoly  rule  have  to 
fear  is  just  such  local  and  sporadic  contests  as  that 
which  has  arisen  in  Kansas.  When  analyzed,  the  fight 
there  for  a  State  refinery  is  not  one  for  the  benefit  of 
the  whole  people,  having  for  its  purpose  the  reduction 
of  the  price  of  oil  to  the  consumer.  Except  in  so  far 
as  it  is  a  common  impulse  of  the  masses  to  applaud 
whenever  and  wherever  a  well-directed  blow  at  monopoly 
is  delivered,  only  a  lot  of  Kansas  capitalists  owning  oil 
wells  are  to  be  congratulated  upon  the  passage  of  the 
laws  recently  approved  by  Governor  Hoch.  These  cap- 
italists may  find  temporary  protection,  but  their  fate 
Avill  be  ultimately  settled  by  interstate  railroads,  quick 
to  learn  the  full  extent  of  the  profits  of  oil  production, 
and  ever  ready  to  serve  Standard  Oil.  Kansas  con- 
sumers must  buy  wherever  they  can  most  cheaply,  re- 
gardless of  the  place  of  production.  In  the  end,  the 
lion's  share  of  profit  between  cost  of  production  and 
selling  price  will  be  appropriated  by  the  railroads.  Any 
Kansas  statute  attempting  to  regulate  freight  rates 
must  pass  the  ordeal  of  the  Federal  courts  and  must 
stand  or  fall  according  to  the  unjust  but  established 
rule  that  fixed  charges,  including  interest  on  bonded 
indebtedness,  must  be  first  paid,  after  which  stock- 
holders are  entitled  to  reasonable  dividends. 

56 


A    PLEA    FOR    RADICAL    ACTION 

Moreover,  the  principle  underlying  this  legislation, 
conferring  benefits  upon  a  class  of  business  men  in 
which  all  do  not  equally  share,  is  vicious;  nor  do  the 
peculiar  hardships  imposed  upon  the  Kansas  oil  men 
warrant  the  expenditure  of  public  money  for  a  State  re- 
finery for  their  accommodation.  The  oil  men  will  find 
themselves  little  better  off  with,  than  without,  a  State 
refinery.  The  real  problem  confronting  them  is  one 
of  transportation.  It  is  not  the  means  of  production 
nor  of  refining  the  product  that  constitutes  their  diffi- 
culty. They  would  have  no  trouble  on  the  score  of  in- 
dependent refineries  if  they  were  within  reach  of  a 
market  on  such  terms  as  would  leave  them  a  profit. 
Notwithstanding  oceans,  lakes,  rivers,  and  railroads, 
cheap  transportation  is  still  the  greatest  of  all  indus- 
trial and  commercial  needs.  The  fact  that  a  small 
rebate,  going  to  one  producer  of  any  article  of  consid- 
erable bulk  in  proportion  to  intrinsic  value,  enables  him 
to  break  down  and  drive  out  competition,  proves  this. 
Had  Kansas,  instead  of  spending  $200,000  and  util- 
izing her  convict  labor  for  the  construction  of  a  small 
manufacturing  plant,  issued  three  per  cent  bonds  to  the 
amount  of  $15,000,000,  the  longest  to  run  thirty 
years,  with  a  sinking  fund  adequate  to  wipe  out  the 
debt  in  that  time,  and  from  their  sale  had  built  a  rail- 
road and  pipe  line  to  the  Gulf,  and  had  authorized 
cities  and  counties  to  construct  branch  lines  to  connect 
with  it,  not  only  the  oil  problem,  but  the  cattle,  hog, 
sheep,  corn,  wheat,  and  other  problems  that  are  now 
troubling  all  her  people  would  have  been  solved.  An 
average  of  less  than  $750,000  per  annum  would  keep 
down  the  interest  and  extinguish  such  an  indebtedness 
in  thirty  years,  and  could  be  paid  out  of  the  earnings 
of  such  a  road  at  much  lower  rates  than  the  people  are 
now  paying.  It  could  now  be  built  and  moderately 
equipped   and   be   a    practicable   line   to   the   Gulf    for 

57 


BOSS  ISM    AND    MONOPOLY 

$20,000  per  mile,  whereas  the  rates  which  the  Kansans 
and  others  are  now  paying  the  Union  Pacific  and  other 
roads  traversing  the  State  yield  dividends  upon  a  capi- 
talization of  $134,000  per  mile.  Standard  Oil  only 
has  to  play  a  waiting  game  in  order  to  win  the  fight 
in  Kansas  as  elsewhere,  because  (1)  it  is  a  colossal  cor- 
poration that  never  dies,  grows  old,  or  tires,  and  (2)  it 
has  control  of  the  most  perfect  and  diversified  trans- 
portation system  in  the  world. 

The  words  of  Thomas  W.  Lawson  in  a  published  let- 
ter to  W.  R.  Hearst,  dated  February  21,  1905,  referring 
to  the  agitation  against  the  Standard  Oil  Company, 
are  all  too  true  and  so  pertinent  as  to  justify  their  in- 
sertion here :  "  If  the  earnest  workers  in  the  interest  of 
the  people  would  only  keep  constantly  before  them  that 
the  one  thing  '  Standard  Oil ' — the  '  System  ' — pos- 
sesses in  greater  volume  even  than  money  is  time,  then 
they  would  see  how  little  your  investigations  of  Stand- 
ard Oil,  Coal  Trust,  rebates,  and  Beef  Trust  amount 
to.  '  Standard  Oil '  knows  the  people  will  hang  to  one 
subject  only  so  long,  unless  they  are  quickly  interested 
to  a  frenzy  point  on  the  subject  in  front  of  them,  and, 
knowing  this,  they  only  ask  that  the  champions  of  the 
people  come  at  them  in  such  a  way  that  they  can  tire 
out  the  people's  interest,  the  people's  wrath.  This  has 
been  the  great  weapon  of  '  Standard  Oil '  and  the  '  Sys- 
tem '  in  the  past,  and  it  is  the  one  they  depend  upon 
to-day — this  one  and  their  money." 

The  people  are  in  the  habit  of  sending  to  their 
State  capitals  to  make  laws  for  them,  and  to  vote  for 
United  States  Senators  a  certain  number  of  men,  seven- 
ty-five per  cent  of  whom  are  incompetent  and  many  of 
the  remaining  twenty-five  per  cent  are  representatives 
of  special  interests.  And  in  this  matter  the  people  of 
the  large  cities  are  the  worst  offenders.  Is  it  any  won- 
der, then,  that  the  Senate  stands  like  a  stone  wall  across 

58 


A    PLEA    FOR    RADICAL    ACTION 

the  path  of  progress  and  good  government?  The  fore- 
most men  of  a  district  distinguished  for  wisdom  and 
integrity  should  be  selected  for  State  legislators.  If 
parties  must  exist,  candidates  should  be  selected  at 
primary  elections  and  instructed  as  to  candidates  for 
United  States  Senator,  and  some  way  should  be  found 
to  punish  disobedience  to  instructions.  It  is  remarkable 
how  easily  the  bosses  manage  to  keep  the  voters  lulled, 
or  to  nullify  their  power  by  dividing  them. 

It  requires  intelligence  as  well  as  good  intentions 
to  know  how  to  discharge  the  duties  of  citizenship. 
The  main  issue  is,  or  always  should  be,  wise  and  honest 
government,  or,  as  it  is  called,  "  good  government." 
Such  an  issue  the  party  bosses  despise,  and  will  avoid 
if  possible.  If  they  cannot,  they  will  obscure  it  and 
confuse  the  electorate  with  side  issues  and  non-essen- 
tials, such,  for  instance,  as  the  effect  upon  the  next  State 
or  presidential  election.  The  only  loyal  partisans  are 
the  honest  voters.  If  these  can  be  moved — and  usually 
they  are — by  such  considerations  as  a  party  interest, 
their  votes  are  thereby  divided,  leaving  the  riff-raff  fol- 
lowers of  the  boss-monopoly  ring  free  to  be  thrown  to 
the  candidates  picked  out  for  them  to  be  supported  by 
the  interested  political  herders.  Sometimes  the  favored 
candidates  are  all  on  one  ticket;  in  other  instances  they 
are  culled  from  different  tickets.  If  one  party  machine 
is  more  completely  in  the  hands  of  a  boss  than  the 
other,  the  bosses  of  both  parties  are  apt  to  unite  for  the 
election  of  a  majority  of  the  stronger  party's  ticket 
upon  some  "  fair  "  arrangement  for  a  division  of  the 
spoil.  Of  the  non-partisan,  or  rather  it  may  be  more 
proper  to  term  it  the  indifferent  partisan,  nature  of 
bossism,  the  relation  of  Tammany  bosses  to  Republican 
State  bosses  is  a  striking  illustration.  Having  a  ma- 
jority only  in  that  part  of  Greater  New  York  situated 
on  Manhattan  Island,  the  Tammany  chief  must  trade 

59 


BOSSISM   AND    MONOPOLY 

votes  in  the  Legislature  to  help  the  Republican  bosses 
overcome  the  honest  up-State  representatives  of  the 
people  in  State-robbing  schemes,  in  order  to  get  the 
legislation  it  requires  for  New  York.  Then  there  are 
great  corporations  in  New  York  which  require  State 
favors,  for  which  they  go  to  the  Republican  bosses; 
and  in  that  deal  they  give  financial  support  to  the  Re- 
publican State  ticket.  The  same  corporations  can  al- 
ways fare  better  at  the  hands  of  Tammany  when  in 
power  in  New  York  City  than  from  any  reform  admin- 
istration ;  so  there  they  support  Tammany's  candidates 
and  pay  it  financial  tribute. 

Under  the  boss-monopoly  system,  when  the  people 
have  at  the  ballot  box  set  their  seal  of  condemnation 
upon  a  man,  their  will  is  treated  with  contempt,  and  they 
find  the  man  well  cared  for  through  the  exercise  of  the 
appointive  power.  Thus,  when  the  notorious  author  of 
the  Remsen  Gas  bill,  which  Governor  Odell  vetoed  un- 
der the  pressure  of  public  opinion,  had  been  over- 
whelmingly defeated  for  reelection  in  1904,  he  was 
immediately  appointed  Deputy  Commissioner  of  Ju- 
rors. And  Ernest  H.  Wallace,  another  member  of  the 
Legislature,  who  introduced  the  Anti-Transfer  bill  and 
supported  other  measures  favored  by  the  Metropolitan 
Traction  Company,  having  the  effect  of  relieving  it  of 
its  obligations,  also  failed  of  reelection.  But  he  had 
earned  his  reward;  so  he  was  made  Deputy  Attorney 
General  for  New  York  City,  where  the  duty  of  prose- 
cuting local  traction  companies  will  devolve  upon  him. 
William  Michael  Byrne,  of  Delaware,  so  mixed  up  in 
the  long-drawn-out  scandal  of  Addicksism  that  the 
Senate  refused  to  confirm  his  nomination  to  be  the  Fed- 
eral District  Attorney  in  his  native  State,  was  made  an 
assistant  to  the  United  States  District  Attorney.  And 
instances  of  the  use  of  the  appointive  power  to  reverse 
popular  verdicts  might  be  multiplied  indefinitelv. 

60 


A    PLEA    FOR    RADICAL    ACTION 

Pennsylvania  and  each  of  her  cities  has  been  for 
many  years  completely  at  the  mercy  of  bosses ;  and  her 
election  laws  are  so  constructed  as  to  render  the  condi- 
tion of  her  citizens  with  respect  to  their  government  al- 
most hopeless.  There  are  no  personal  registrations  of 
voters  in  that  State,  and  the  dominant  machine  has  the 
preparation  of  the  lists  of  names  to  be  voted  in  its  own 
hands.  Sometimes  twenty-five  and  at  other  times  as 
high  as  seventy-five  per  cent  of  the  names  in  a  list  for 
a  particular  city  or  district  are  those  of  persons  long 
since  dead  or  who  have  become  non-resident.  These 
names  are  used  by  repeaters  in  the  employ  of  the  bosses 
who  go  from  place  to  place.  If  it  is  suspected  that  a 
respectable  citizen  may  not  vote  according  to  the 
wishes  of  the  boss  his  name  is  voted  by  a  repeater  and 
his  vote  is  not  received  when  he  comes  to  the  polls. 
The  courts  are  parts  of  the  machine,  and  a  prosecution 
for  violation  of  the  election  laws  would  be  vain  and 
fruitless.  The  citizens  of  that  State  have  been  very 
busy  reaping  the  benefits  of  special  legislation  in  one 
form  or  another  for  many  years,  paying  little  attention 
to  the  methods  by  which  it  was  secured,  until  now  it 
would  require  a  revolution  to  take  their  local  govern- 
ments out  of  the  hands  of  party  bosses  and  monopolies. 
There  are  probably  more  heads  of  families  in  Philadel- 
phia who  own  their  own  homes  than  in  any  city  of  equal 
size  in  the  world.  But  have  they  not  paid  dearly  for 
their  prosperity.'^ 

It  is  an  old  trick  of  the  party  bosses  when  the  people 
demand  relief  from  too  high  rates  for  transportation 
or  commodities  supplied  by  corporations,  to  go  into  a 
political  deadlock  on  the  question,  and  thus  enable  their 
followers  in  the  legislative  body  to  shirk  individual  re- 
sponsibility for  non-action  by  feigning  a  trivial  party 
issue.  Thus,  at  the  last  session  of  the  New  York  Legis- 
lature, the  Tammany  boss  demanded  a  seventy-five-per- 

61 


BOSSISM    AND    MONOPOLY 

cent  gas  rate  for  New  York  City,  while  the  Republican 
boss  held  out  for  an  eighty-cent  rate.  Instead  of  com- 
promising upon  one  or  the  other  rate,  both  sides  held 
out  and  the  $1  rate  continues. 

The  savage  bows  down  before  an  ignorant,  besotted 
ruler  because  he  fears  the  ruler  will  punish  him  and 
deprive  him  of  some  of  the  means  for  the  gratification 
of  his  appetites  and  passions.  Of  like  mind  and  manner 
with  the  savage  are  millions  of  American  citizens,  who 
tamely  submit  to  grave  abuses,  economic  and  political, 
through  fear  of  losing  part  or  all  of  the  little  profit 
which  the  railroads  and  other  monopolies  now  leave  in 
their  hands,  when,  if  they  only'  knew  their  power  and 
how  to  exercise  it,  their  emancipation  could  be  swiftly 
and  safely  brought  about.  So  long  as  ninety  per  cent 
thus  stand  in  fear  of  the  monopoly  tyrant  and  party 
boss  they,  as  well  as  the  other  ten  per  cent,  can  be  per- 
secuted and  deprived  of  their  political  rights  and 
legitimate  share  of  business ;  but  if  a  little  more  than 
forty  per  cent  should  join  the  ten  per  cent  of  those 
who  still  prefer  independence  to  the  miserly  rewards  of 
subserviency,  all  might  again  be  free.  How  much  bet- 
ter than  the  idol-worshiping,  tyrant-fearing  savage  is 
the  small  business  man,  the  wage-earner,  and  the  farmer, 
all  paying  trust  prices  and  railroad  extortions .''  If  they 
followed  the  dictates  of  conscience,  they  would  insist 
upon  an  opportunity  to  vote  on  the  question  of  govern- 
ment ownership  of  railroads  and  all  other  public  utili- 
ties, and  would  follow  this  up  at  the  ballot  box  by  vot- 
ing in  the  affirmative.  They  heed  the  hired  agents  of 
trust-fed  and  railroad-subsidized  political  machines  and 
bosses,  who  frighten  them  by  raving  against  socialism, 
when,  if  they  would  but  allow  themselves  to  think,  they 
would  see  at  once  that  the  twin  tyrants  for  whom  the 
agents  speak  are  worse  than  any  equal  number  of  so- 
cialists that  ever  lived.     They  are  anarchists ;  that  is 

62 


A    PLEA    FOR    RADICAL    ACTION 

to  say,  they  are  men  who  refuse  to  be  controlled  by  the 
laws  that  are  made  for  them  and  others.  The  anarchist 
with  wild  eye  and  murderous  impulse,  occasionally  met 
with  in  the  cities,  is  not  the  one  to  be  most  feared.  The 
really  dangerous  anarchists  give  orders  through  party 
bosses  to  aldermen,  legislators,  congressmen,  and  sena- 
tors— even  to  judges  and  governors  and  presidents — 
to  set  aside  the  laws,  or  to  make  new  laws  that  further 
enrich  themselves  at  the  public  expense.  Nor  are  party 
bosses  who  corrupt  public  officers  the  only  anarchistic 
agents.  The  ablest  lawyers  in  the  country — those  who 
pay  to  have  their  virtues  and  talents  extensively  adver- 
tised— are  constantly  stultifying  themselves,  and  under- 
taking for  bribes,  called  fees,  to  defeat  or  nullify  every 
law  that  offers  a  check  upon  the  rapacity  of  their  an- 
archistic employers.  They  fight  in  the  courts  until  they 
have  won  their  spurs  and  are  then  elevated  to  the  bench 
or  to  the  Senate,  where  their  work  is  still  more  destruc- 
tive because  done  under  the  cloak  of  public  service. 
And  thus  we  have  these  anarchists  undermining  and  pol- 
luting the  Government  on  the  inside  as  well  as  from  the 
outside.  Where  is  the  law  aimed  at  railway  extortion 
or  trust  tyranny  that  has  ever  reduced  rates  or  prices? 
By  constant  agitation  and  protest  we  have  laws  en- 
acted and  expensive  commissions  created,  but  the  an- 
archists of  the  steam-yacht  and  private-car  brand 
openly  violate  the  laws,  ignore  court  orders,  and  defy 
the  commissions.  Our  country  is  almost  free  from  the 
anarchist  of  the  bomb-throwing  type.  But  we  have  the 
anarchy  of  great  wealth  obtained  through  the  opera- 
tion of  special  laws,  and  what  is  equally  deplorable,  we 
have  slavish  submission  by  the  people.  If  we  would  be 
free,  we  must  arise  from  our  kneeling  posture  and  unite 
our  votes,  as  the  anarchists  do  their  money. 

To  a  great  extent  party  rule  usurps  the  preroga- 
tives designed  by  the  founders  of  our  Government  to 

63 


BOSSISM    AND    MONOPOLY 

be  exercised  by  free  and  untrammeled  representatives 
chosen  by  the  people.  The  greatest  civic  power  was 
intended  to  rest  with  the  legislatures,  State  and  Fed- 
eral. It  is  true  that  legislators  still  exercise  a  free 
hand  in  some  matters ;  but  only  in  those  which  do  not 
directly  affect  corporate  and  other  purely  selfish  in- 
terests which  give  to  bosses  their  power  and  furnish  the 
wherewithal  to  maintain  their  prestige.  But  how  can 
it  be  claimed  that,  in  anything,  the  lawmaker  is  a  free 
agent,  when  he  is  such  in  nothing  except  by  leave  of 
the  party  boss?  Under  existing  conditions,  the  lists  of 
names  from  which  the  people  are  permitted  to  select  rep- 
resentatives at  the  polls  must  have  their  availability 
viseed  by  the  controlling  financial  interests  behind  the 
party  machine.  Often  the  people  at  a  general  elec- 
tion delude  themselves  with  the  assumption  that  they 
are  exercising  the  prerogatives  of  citizenship,  when 
in  reality  they  are  deciding  between  two  or  more  sets 
of  candidates,  most  or  all  of  whom  have  been  previously, 
figuratively  speaking,  marked  and  branded  by  the  great 
financial  despots  whose  political  servants  they  are. 

What  the  people  do  is  to  meet,  clamor,  resolve,  and 
quarrel  with  the  men  they  have  elected  between  elections, 
and  when  the  time  for  the  next  election  comes  around 
divide  again  and  vote  their  respective  party  tickets,  on 
which  may  appear  the  names  of  the  same  men  who  have 
betrayed  them,  or  others  nominated  in  the  same  way. 
All  at  once,  and  at  a  time  when  no  candidates  are  in 
sight,  and  there  is  no  person  in  particular  to  strike  at, 
some  preacher  starts  a  crusade  against  vice ;  or  some 
professor  of  sociology  discharges  a  lot  of  good  stuff 
about  the  suffering  and  oppressions  of  the  poor;  or 
some  reformer  points  out  the  infamy  of  public  service 
corporations ;  or  some  labor  leader  loads  up  and  fires  a 
broadside  at  corporations  for  cruelties  practiced  upon 
wage-earners.     The  newspapers  take  it  up,  and  society 

64 


A    PLEA    FOR    RADICAL    ACTION 

is  stirred  from  center  to  circumference  with  righteous 
and  other  kinds  of  indignation.  The  various  crusaders 
furnish  excellent  "  copy  "  for  the  daily  press.  They 
overlap  each  other,  and  constitute  a  furor  of  oceanic 
magnitude  and  volcanic  vehemence.  But,  like  other 
storms,  these  soon  blow  themselves  out,  the  crusaders 
forget  their  splendid  resolutions,  and  on  next  election 
day  are  led  by  the  same  so-called  leaders  to  do  the  same 
old  trick  at  the  polls — all  in  the  name  of  "  the  organiza- 
tion." Just  as  this  is  written,  the  whole  nation  seems  to 
be  in  a  state  bordering  on  frenzy  on  the  subjects  of 
political  graft  and  monopoly  oppression.  All  are 
now  talking,  from  the  President  down  to  the  bootblack. 
Most  of  the  talk  is  wise  and  from  the  proper  stand- 
point, and  many  are  deluded  into  the  belief  that  some- 
thing is  about  to  be  done,  that  at  last  the  manipulators 
of  the  stock  market,  the  jury  fixers,  the  legislative  lobby- 
ists, the  financial  magnates,  who  water  corporate  securi- 
ties, misuse  insurance  reserves,  and  rig  schemes  to  rob 
the  "  Street,"  are  really  in  their  holes,  and  that  their 
only  hope  of  escape  is  to  dig  out  through  the  bottom. 
But  the  cause  of  all  the  evils  complained  of  is  not  men- 
tioned. That  cause  is  the  license  which  the  people  give 
to  their  party  bosses  to  set  up  conventions,  to  place 
corporation  collars  around  the  necks  of  candidates,  and 
the  incapacity  of  themselves  to  discern  the  nature, 
force,  and  effect  of  the  rotten  foundation  for  political 
action  thus  laid  before  their  eyes. 

The  people  ought  to  some  time  awake  to  the  fact 
that  the  political  bosses  have  no  genuine  political  con- 
victions, that  they  in  turn  are  bossed  by  men  higher 
up — namely,  the  corporation  lawyers — who  in  turn  are 
merely  the  mouthpieces  for  those  in  the  third  heaven 
(or  hell)  of  bossism — the  corporate  president,  manager, 
or  other  bag-holder. 

In  State  and  municipal  politics  the  bosses  of  the 
65 


BOSS  ISM    AND    MONOPOLY 

leading  parties  are  in  partnership.  No  more  is  there 
a  fixed  principle  of  governmental  policy  involved  than 
there  is  an  astronomical  law.  The  boss  of  the  prevail- 
ing party  usually  gets  the  lion's  share  of  the  corruption 
fund,  but  the  boss  of  the  losing  party  always  comes  in 
for  a  percentage.  The  real  fight  between  party  tickets 
is  a  fight  between  Republican  Boss  Robb  and  Democratic 
Boss  Jobb  for  the  big  end  of  the  swag. 

The  people  at  large  have  but  a  faint  conception  of 
the  far-reaching  influence  of  the  "  corporation  "  lawyer 
in  matters  of  legislation,  in  the  administration  of  the 
laws,  and  in  the  conduct  of  political  machinery.  They 
know  the  boss — at  any  rate  they  have  heard  of  him. 
Usually  the  citizen  of  ordinary  intelligence  knows  the 
name  and  personal  appearance  of  the  bosses  of  both  the 
leading  parties.  If  he  is  a  partisan  and  takes  an  inter- 
est in  political  action  he  usually  comes  in  contact  with 
the  boss.  But  in  the  infamous  schemes  of  party  poli- 
tics, made  respectable  by  professions  of  loyalty  to  some 
so-called  party  principle,  there  is  a  power  beyond  and 
beneath  the  boss,  to  wit:  the  public  service  corporation 
— usually  several  forms  of  it.  Its  visible  representa- 
tive— and  there  are  usually  one  or  more  for  each  public 
service  corporation  in  each  State  or  city — is  the  cor- 
poration lawyer.  There  are  various  methods  by  which 
he  obtains  admittance  behind  the  screen  of  corporation 
villainy  and  gets  his  name  added  to  the  pay  roll.  He 
may  happen  to  be  related  to,  or  intimate  with,  a  judge 
who  is  a  successful  politician  and  an  adept  in  covering 
his  tracks.  He  may  have  adroitly  managed  some  piece 
of  boodling  legislation  as  a  member  of  the  Legislature, 
or  successfully  done  some  crooked  job  before  a  court, 
the  benefits  of  which  accrued  to  a  public  service  corpo- 
ration. In  that  case  he  has  won  his  spurs,  that  is,  has 
established  the  proper  character  and  won  favor,  and  is 
entitled  to  standing  as  a  corporation  tool — a  corpora- 

66 


A    PLEA    FOR    RADICAL    ACTION 

tion  lawyer.  It  is  not  to  be  supposed  that  such  real 
"  character  "  will  alone  entitle  him  to  high  rank  or  pay 
or  permanent  employment.  These  are  reserved  for  the 
rascal  of  smooth  deportment,  oily  tongue,  respectable 
connections,  moral,  even  religious,  pretensions,  and 
brains.  Sad  to  relate,  but  true  it  is,  that  while  not  all 
the  lawyers  of  great  ability  who  are  appointed  to 
Cabinet  positions  become  the  advisers  and  servants  of 
monopolistic  corporations,  it  must  be  conceded  that  such 
is  the  rule.  Look  at  the  long  list  of  senators  elected  by 
subservient  and  corrupt  legislatures  at  the  dictation  of 
railroads  and  trusts,  who,  pretending  to  represent  the 
people  of  the  States  in  that  body  where  sat  such  men 
as  Clay,  Webster,  Benton,  Thurman,  Blaine,  and  Hoar, 
simply  guard,  for  bribe  money,  called  fees,  the  interests 
of  the  masters  who  had  them  elected. 

There  was  a  time  when  some  attention  was  paid  to 
the  declarations  and  promises  contained  in  party  plat- 
forms, but  we  have  now  reached  an  era  when  the  plat- 
form becomes  functus  officio  at  the  closing  of  the  polls 
on  the  night  of  election.  At  that  point  policy  entirely 
supersedes  party  principle;  and  party  policy  is  simply 
the  fiscal  policy  or  programme  prepared  before  those 
elected  have  been  installed  by  those  who  have  financed, 
acting  in  concert  with  those  who  have  successfully  man- 
aged, »the  campaign.  The  measures  enacted  pursuant 
to  the  programme  are  advocated  as  expedient,  patriotic, 
even  benevolent,  though  perchance  inconsistent  with  the 
promises  in  reliance  upon  which  the  necessary  votes  to 
elect  were  obtained.  In  the  next  campaign  a  new  set 
of  declarations  are  plat  formed,  based  upon  the  more 
recent  performances,  claimed  and  plausibly  reasoned  out 
to  be  promotive  of  public  interests.  In  other  words,  a 
new  set  of  promises  are  made,  to  be  again  disregarded, 
and  pledges  made  to  others  than  the  electorate — pledges 
made  in  secret  in  consideration  of  campaign  corruption 

67 


BOSSISM    AND    MONOPOLY 

funds — are  substituted  and  fulfilled.  Between  elections 
vast  monopolies  and  aggregations  of  millionaii'es  called 
syndicates,  conspire  together  and  extract  from  toil  and 
from  every  line  of  business  hundreds  of  millions  of 
dollars,  keeping  the  people  so  busy  barring  the  wolf  of 
starvation  from  the  door  that  they  have  little  time  to 
study  political  and  economic  questions.  They  only 
realize  that  they  are  being  mercilessly  taxed  with  the 
cost  of  living,  utter  an  occasional  howl,  and  go  on  en- 
during and  guessing  what  the  next  turn  of  the  screws 
will  be,  until  the  next  presidential  election.  Then  one 
or  both  of  the  leading  parties  collects  millions  of  dollars, 
hires  the  best  talent  in  the  land  to  go  forth  and  orate 
upon  non-essentials,  and  an  army  of  secret-service  men 
to  ascertain  who  and  how  many  in  each  precinct,  county, 
and  State  can  be  bribed,  and  how  many  can  be  cajoled, 
shamed,  or  browbeaten  with  a  threat  of  party  ostra- 
cism, and  how  many  recalcitrants  can  be  coerced  by 
threats  of  discharge  from  employment  or  loss  of  busi- 
ness into  voting  the  party  ticket.  The  same  corruption 
in  office,  the  same  betrayal  of  party  promises,  the  same 
infamous  methods  of  carrying  elections  are  witnessed 
from  year  to  year  and  repeated  at  one  election  after 
another.  And  many  voters,  who  either  know  the  facts 
or  refuse  to  be  enlightened,  go  on  submitting  and  par- 
ticipating, voting  the  same  old  party  ticket  because  their 
fathers  voted  it,  or  for  some  cheap  bribe,  or  upon  some 
other  absurd  pretext. 

The  injury  to  the  public  of  partisan  rivalry  and 
jealousy  is  sometimes  seen  in  a  clear  light.  For  instance, 
when  the  accomplishment  of  a  great  work  of  vital  and 
urgent  importance  is  postponed  by  a  party  in  power  in 
the  fear  that  in  carrying  it  out  the  other  party  will 
acquire  prestige,  or  that  its  leaders  will  realize  great 
financial  gains  in  which  the  party  in  power  at  the 
time  will  not  equally  share.     A  striking  illustration  is 

68 


A    PLEA    FOR    RADICAL    ACTION 

afrorded  in  the  proposition  to  furnish  to  Greater  New 
York  a  more  abundant  and  permanent  water  supply. 
For  years  the  people  of  that  great  city  have  been  men- 
aced with  a  water  famine,  and  were  only  saved  by  a 
succession  of  seasons  of  abundant  rain.  A  Republican 
Legislature  has  persistently  refused  to  enact  measures 
authorizing  the  city  to  inaugurate  the  work  of  con- 
struction because  the  control  of  the  work  would  be  in 
the  hands  of  a  Democratic  municipal  administration, 
and  the  enormous  expenditures  would  financially  benefit 
Democratic  officials  and  employes.  In  Febiniary,  1905, 
the  danger  of  further  delay  became  so  obvious,  and  the 
necessity  for  immediate  action  so  urgent,  that  partisan 
objections  were  temporarily  waived,  and  a  delegation, 
headed  by  the  Democratic  Mayor  McClellan  and  his  im- 
mediate predecessor,  ex-Mayor  Low,  Republican,  ap- 
peared before  the  proper  committee  at  Albany  and 
united  in  an  explanation  of  the  situation  and  in  urging 
the  taking  of  preparatory  steps.  Their  bi-partisan 
cooperation  soon  bore  fruit.  But  how  many  reforms  as 
vital,  if  not  so  urgent,  are  subjected  to  the  dry  rot  of 
indefinite  postponement  because  of  party  policies,  boss 
programmes,  and  the  corrupting  influence  of  public 
service  corporations,  in  whose  interest  mainly  party 
names  are  used  and  the  divisions  of  the  electorate  into 
contending  ranks  perpetuated. 

The  defenders  of  monopoly  and  apologists  for  all  the 
enactments  by  which  the  people  are  financially  plucked 
declare  that,  after  all,  ours  is  the  only  perfect  form  of 
government  ever  instituted.  They  point  to  vast  aggre- 
gates of  annual  gains  in  business,  and  aggregate  in- 
creases of  accumulated  wealth,  but  they  avoid  details. 
They  never  mention  the  fact  that  the  increase  of  annual 
gains  was  realized  by  the  comparatively  few  who  already 
had  more  than  they  were  honestly  entitled  to,  and  that 
the  accumulations,  after  having  been  deposited  by  the 

69 


BOSSISM    AND    MONOPOLY 

toiling  millions  in  savings  banks  and  with  insurance 
companies,  finally  went  into  and  rested  in  the  hands  of 
those  whose  prior  accumulations  enabled  them  to  control 
previous  elections  and  dominate  absolutely  legislation 
and  administration. 

The  English  people  really  have  the  substance  of 
self-government,  while  we  have  only  the  form.  And 
even  in  Germany  the  will  of  the  people  has  a  more  pow- 
erful and  direct  influence  in  shaping  the  laws  and  poli- 
cies of  government  than  can  be  truthfully  claimed  by 
the  people  of  the  United  States.  The  Germans  have 
made  more  progress  toward  practical  democratic  rule  in 
the  last  three  decades  than  any  other  people,  despite  the 
fact  that  their  government  is  autocratic  in  form,  and 
that  the  Emperor  is  surrounded  by  a  titled  nobility  and 
sustained  by  a  large  standing  army. 

In  England,  if  parliament  enters  upon  a  policy  or 
enacts  a  measure  contrary  to  the  wishes  of  the  elector- 
ate, the  latter  possess  a  means  for  making  their  views 
known.  And  thereupon  parliament  is  dissolved,  and  the 
disputed  question  or  policy  referred  back  to  the  people 
for  their  verdict.  Whatever  the  result  of  the  vote  taken 
upon  the  referendum,  the  new  parliament  reflects  in  legis- 
lation that  result.  The  House  of  Lords  dare  not  proceed 
contrary  to  the  will  of  the  people  nor  even  the  crown. 

No  Act  of  Parliament  has  been  vetoed  for  more  than 
a  hundred  years,  though  in  theory  the  king  holds  the 
veto  power  over  all  legislation.  The  House  of  Lords 
heeds  the  voice  of  the  people;  but  our  Senate  holds  the 
same  relation  to  the  people,  to  all  practical  intents  and 
purposes,  as  that  held  by  the  Grand  Ducal  Council  of 
Russia  to  the  Russians. 

In  our  newspapers  we  express  our  inability  to  under- 
stand why  the  Russian  people  have  so  long  submitted  to 
the  tyrannical  power  of  the  nobility  of  that  country, 
just  as  if  we  were  not  governed  at  home  by  an  autocracy 

70 


A    PLEA    FOR    RADICAL    ACTION 

just  as  unprincipled,  selfish,  and  cruel.  The  grand 
dukes  of  Russia  exert  their  influence  with  the  Czar  to 
nullify  the  eff^orts  of  the  people  to  secure  relief  from 
existing  conditions,  while  in  this  country  the  bosses  and 
monopolies  exercise  an  influence  equally  evil  and  potent 
to  prevent  our  "  highest  legislative  body  in  the  world," 
whose  members  were  elected  to  represent  us,  giving  relief 
from  railroad  and  other  monopoly  extortion.  Our  atti- 
tude should  not  be  that  of  critics  of  the  Russian  people, 
but  of  sympathizers  with  them  in  a  common  affliction. 
If  there  be  any  diff'erence,  we  are  the  more  culpable  of 
the  two  peoples.  They  have  no  other  remedy  than  revo- 
lution, while  we  have  an  adequate  peaceful  remedy  at 
hand  whenever  we  choose  to  resort  to  it. 

When  any  particular  municipal  government  becomes 
so  corrupt  and  oppressive  as  to  seriously  increase  tax 
bills  and  rates,  and  otherwise  so  scandalous  as  to  attract 
attention  abroad,  civil  pride  takes  ofl'ense,  and  good 
government  leagues,  civic  reform  associations,  and  the 
like  are  formed;  then  the  dominant  party  either  tem- 
porarily conforms  to  the  demand  thus  created  for  a  bet- 
ter class  of  nominees  or  suff*ers  one  defeat,  knowing  that 
as  soon  as  the  election  is  over  the  reformers  will  hie  back 
to  their  business,  leaving  "  good  government "  to  take 
care  of  itself.  That  it  does  by  falling  into  the  hands 
of  new  bosses  who,  in  their  turn,  are  forced  into  retire- 
ment at  the  next  election.  Sometimes  the  men  elected 
under  the  "  good-government "  movement  turn  out  to 
be  the  same  old  article  previously  in  use,  so  that  the 
party  boss  who  was  temporarily  shoved  aside  comes  into 
his  own  soon  after  the  elect  are  sworn  into  office.  One 
thing  needed  to  change  all  this  is  to  give  that  large 
class  who  really  prefer  honest  administration  of  munici- 
pal affairs  increased  importance  in  government  from 
their  standpoint;  to  make  the  difference  between  bad 
or  good  public  management  a  difference  considerable 
6  Tl 


BOSSISM    AND    MONOPOLY 

in  amount,  as  measured  in  dollars  and  cents.  When 
the  citizen,  now  so  indifferent,  comes  to  realize  that  the 
sums  to  be  handled  by  public  officers  are  ten  times  as 
much  as  at  present,  he  will  no  longer  intrust  the  making 
of  his  party  ticket  to  a  small,  corrupt  machine.  He  will 
participate  with  all  his  influence  in  the  primary  election, 
and  if  he  fails  to  get  a  trustworthy  candidate  on  his 
ticket  for  a  particular  office,  he  will,  along  with  many 
others,  throw  off  party  strings  and  elect  one  upon  an 
opposition  ticket,  or  help  form  a  new  organization  and 
put  up  an  independent  ticket.  Of  course  such  independ- 
ent tickets  may  fail  of  election  for  a  time,  but  the  final 
effect  will  be  the  breaking  up  of  machine  progi'ammes 
and  the  bringing  of  party  managers  to  their  senses. 
Thus  there  will  soon  be  a  hot  rivalry  between  these  dif- 
ferent parties  to  put  up  candidates  of  a  character  to 
secure  the  votes  of  independent  tax-paying  citizens. 

It  is  said  by  Mr.  Steffens  in  "  The  Shame  of  the 
Cities,"  "  The  boss  is  not  a  political,  he  is  an  American 
institution,  the  product  of  a  freed  people  that  have  not 
the  spirit  to  be  free."  It  would  be  more  in  conformity 
to  the  facts  to  say  that  while  American  citizens  have 
sufficient  spirit  to  attain  freedom  when  denied  to  them, 
and  to  protect  it  when  threatened,  yet  political  affairs 
do  not  sufficiently  concern  them  financially  to  command 
proper  attention  from  them.  All  this  will  be  changed 
when  the  administration  of  government,  general  as  well 
as  local,  directly  and  considerably  affects  the  ordinary 
and  essential  conditions  under  which  business  is  trans- 
acted by  the  capitalist  and  wages  earned  by  the  em- 
ployee. The  same  writer  says,  with  considerable  truth, 
"  And  it's  all  a  moral  weakness,  a  weakness  right  where 
we  think  we  are  strongest.  Oh,  we  are  good  on  Sunday, 
and  we  are  fearfully  patriotic  on  the  Fourth  of  July! 
But  the  bribe  we  pay  to  the  janitor  to  prefer  our  inter- 
ests to  the  landlord's  is  the  little  brother  of  the  bribe 

72 


A    PLEA    FOR    RADICAL    ACTION 

passed  to  the  alderman  to  sell  a  city  street  and  the  father 
of  the  air-brake  stock  assigned  to  the  president  of  a 
railroad  to  have  his  life-saving  invention  adopted  on 
his  road.  And  as  for  graft,  railroad  passes,  saloon  and 
bowery-house  blackmail  and  watered  stock,  all  these 
belong  to  the  same  family.  We  are  pathetically  proud 
of  our  democratic  institutions  and  our  republican  form 
of  government,  of  our  grand  Constitution  and  our  just 
laws.  We  are  a  free  and  sovereign  people,  we  govern 
ourselves,  and  the  government  is  ours ;  but  that  is  the 
point.  We  are  responsible,  not  our  leaders,  since  we 
follow  them.  We  let  them  divert  our  loyalty  from  the 
United  States  to  some  '  party  ' ;  we  let  them  boss  the 
party  and  turn  our  municipal  democracies  into  autoc- 
racies, and  our  republican  nation  into  a  plutocracy. 
We  cheat  our  government  and  we  let  our  leaders  loot 
it,  and  we  let  them  wheedle  and  bribe  our  sovereignty 
from  us.  True,  they  pass  for  us  strict  laws,  but  we 
are  content  to  let  them  pass  also  bad  laws,  giving  away 
public  property  in  exchange,  and  our  good,  and  often 
impossible,  laws  we  allow  to  be  used  for  oppression  and 
blackmail."  These  things  are  all  true  only  in  the  ab- 
sence of  counter  leadership,  counter  organization,  and 
incentives  to  action  that  are  stronger  than  our  self- 
interest  in  the  time,  expense,  and  effort  required  to 
change  political  conditions,  as  is  shown  by  the  same 
author  in  the  same  work.  He  shows  how  one  strong, 
determined  public  officer  and  an  organization  of  less 
than  a  dozen  members  in  Chicago  were  able  to  put  to 
flight  all  the  armies  of  corruption.  In  St.  Louis  and 
Chicago,  respectively,  the  incentive  in  each  case  for 
popular  support  was  the  mere  love  of  public  virtue  and 
the  protection  of  general  interests.  With  the  munici- 
palities in  complete  control  of  public  utilities,  the  better 
class  of  citizenship,  the  largely  preponderating  influ- 
ence in  politics,  will  have  an  interest  in  municipal  gov- 

73 


BOSSISM    AND    MONOPOLY 

ernment  so  direct  and  substantial  that  party  bosses  will 
never  again  be  able  to  become  despotic. 

The  past  has  proved  that,  although  our  people  give 
very  little  evidence  of  public  spirit  when  affairs — com- 
mercial, industrial,  financial,  political,  and  international 
— are  drifting  along  the  even  tenor,  with  ebb  and  flow 
of  the  tide,  yet  in  every  great  national  crisis  all  but  the 
meanest  are  lifted  above  the  ordinary  routine  of  life  by 
waves  of  emotion  and  are  ready  to  make  sacrifices,  even 
to  the  extent  of  offering  up  their  lives.  So  that  those 
who  labor  to  impress  the  popular  mind  with  the  dan- 
gerous conditions  brought  about  in  this  country  by  the 
arrogant,  remorseless  railroads  and  other  monopolies 
need  not  fear  that  their  efforts  will  be  vain.  Fortu- 
nately there  yet  remain  in  every  community  a  large 
number  of  influential  men  whose  welfare  is  not  so  de- 
pendent upon  monopoly  favor  or  disfavor  but  that  they 
can,  without  sacrifice  other  than  of  time  and  labor,  lead 
in  the  work  of  teaching  and  organizing.  If  they  delay, 
the  time  will  soon  come  when  even  they  will  find  them- 
selves under  the  rods  of  the  twin  tyrants — monopoly 
and  the  party  boss.  Few  things  are  more  soul-inspiring 
than  to  see,  as  was  recently  seen  in  Chicago,  a  large 
majority  of  the  substantial  citizens  working  together 
for  the  accomplishment  of  a  great  purpose,  the  result 
of  the  success  being  the  removal  of  a  public  evil  and 
promotion  of  general  welfare.  For  the  time,  all  conflicts 
between  labor  and  capital  were  forgotten,  scrambles  for 
personal  prominence  were  abandoned  or  frowned  down, 
and  rich  and  poor  alike,  all  working  together,  realized 
a  sense  of  civic  obligation.  All  who  had  a  share  in  the 
work  may  now  felicitate  themselves  that,  hereafter,  those 
having  business  to  do,  which  may  as  well  be  done  there 
as  elsewhere,  will  give  that  city  the  preference,  because 
where  there  is  most  public  virtue  there  is  apt  to  be  found 
also  more  individual  honesty.     By  all  standing  together 

74 


A    PLEA    FOR    RADICAL    ACTION 

for  municipal  thrift,  there  will  be  more  to  divide  among 
themselves  as  profits  and  wages.  The  world  has  heard 
of  this  triumph  of  public  spirit  in  Chicago  and  will 
flock  there  to  reside  and  to  invest  capital,  or  at  least  to 
leave  orders  with  the  city's  merchants  and  manufac- 
turers. It  is  remarkable  and  encouraging  tcr  reflect  how 
easily  it  was  done.  Only  a  few  men  of  courage  and 
brains,  such  as  may  be  found  in  any  city,  took  the  lead. 
The  others  of  like  spirit  followed,  and  not  all  the  powers 
of  partisanship,  graft,  and  special  privilege  were  able 
to  prevail  against  them.  Having  taken  the  first  long 
stride  by  a  popular  vote,  there  is  not  the  slightest  dan- 
ger that  the  successive  essential  steps  will  not  be  taken, 
until  it  will  be  a  consummated  municipal  ownership  of 
every  street-car  line,  gas  and  electric  plant,  pipe  and 
wire,  and  of  every  telephone.  Chicago  will  become  more 
and  more  to  the  United  States  what  Paris  is  to  conti- 
nental Europe. 

The  issue  between  private  and  public  ownership  of 
public  utilities  is  a  great  one  and  cannot  be  frowned 
down.  The  railway  magnates  of  the  country  are  at 
last  becoming  alarmed.  They  have  at  last  learned  that 
they  cannot  treat  the  advocacy  of  government  owner- 
ship of  interstate  lines  with  indiff'erence.  They  have 
been  among  the  first  to  see  that  if  the  demand  for  mu- 
nicipal ownership  of  street  railways  becomes  irresistible, 
the  more  reasonable,  if  more  important,  demand  for 
national  ownership  of  interstate  transportation  will  have 
to  be  met  and  answered  at  the  ballot  box  in  some  form 
in  the  near  future.  The  people  can  bring  about  this 
desirable  consummation  just  as  soon  as  they  desire  it. 
They  alone  can  take  the  initiative.  The  fact  that  they 
can  change  the  laws,  even  constitutions,  if  they  go  about 
it  in  the  right  way,  should  inspire  every  individual,  no 
matter  how  humble  or  obscure,  with  a  determination  to 
do  his  full  share. 

76 


BOSSISM    AND    MONOPOLY 

The  workers  and  devoted  leaders  in  the  movement 
for  the  great  uplifting  change  from  private  to  public 
ownership  are  not  so  many  that  they  can  afford  to  divide 
on  non-essentials.  Their  first  great  duty  is  to  convince 
the  people  of  its  expediency,  yea,  necessity  and  incal- 
culable benefits,  socially,  politically,  and  economically. 
At  the  threshold  of  the  great  work  is  the  most  difficult 
task  of  all,  and  that  is  to  overcome  the  inertia  of  the 
masses  and  incite  individuals,  one  after  another,  to 
thought  and  action.  But  this  task  is  not  so  difficult  as 
a  superficial  view  of  the  past  would  seem  to  imply. 
Sometimes  great  changes  in  the  views  of  the  many 
approach  without  exciting  notice  or  comment.  For 
instance,  a  proposition  for  municipal  ownership  is  sub- 
mitted one  year  and  receives  the  support  of  an  insig- 
nificant minority.  No  friend  of  the  cause  should  be 
discouraged  by  such  a  result.  There  may  have  been 
thousands  of  voters  against  the  proposition  who  by 
reading  and  hearing  the  arguments  pro  and  con  during 
the  campaign  were  strongly  impressed  in  favor  of  the 
proposition,  and  yet,  for  lack  of  time  and  capacity  to 
thoroughly  study  the  question,  had  a  lurking  fear  of 
results,  and  decided  finally  to  oppose.  During  the  suc- 
ceeding period,  having  thus  become  interested,  their 
studies  of  the  system  of  public  ownership  have  banished 
their  fears,  and  their  changed  attitude  has  been  forti- 
fied and  firmly  rooted  by  observation  and  public  ex- 
posures of  the  evils  of  the  prevailing  system  of  private 
ownership.  Unfalteringly  and  continuously  should  the 
friends  of  public  ownership  plead  and  teach  and  expose. 
Let  it  be  borne  in  mind  that  great  changes,  such  as  the 
leaders  in  the  cause  of  public  ownership  advocate,  are 
not  at  the  present  day  preceded  by  loud  outcries  from 
the  people  nor  by  exciting  demonstrations  of  popular 
fervor.  The  people  read  much,  even  if  they  do  not  all 
think  deeply.     They  are  slow  to  action,  and  in  almost 

76 


A    PLEA    FOR    RADICAL    ACTION 

every  instance  are  more  than  willing  to  be  led  in  the 
right  direction  by  those  entitled  to  their  respect  and 
confidence.  Much  as  it  may  seem  that  the  people  are 
indifferent  on  this  question,  such  is  not  the  case.  We 
may  marvel  at  the  refusal  of  the  electorate  to  give  the 
necessary  majority  for  a  scheme  of  public  ownership  on 
a  particular  occasion,  but  why  should  we  when  we  con- 
sider the  power,  interest,  and  influence  of  the  opposition  ? 
The  opposing  arguments  are  prepared  and  promulgated 
by  the  best  brains  that  money  can  hire;  that  is  to  say, 
the  shrewdest  of  lawyers  and  publicists.  The  mouths 
which  give  utterance  to  arguments  against  municipal 
ownership  do  not  belong  to  those  who  own  the  brains. 
They  usually  belong  to  those  who  have  studiously  and 
industriously  built  up  reputations,  which  they  do  not 
deserve,  for  civic  virtue  and  public  disinterestedness. 
They  are  sometimes  men  who  never  did  an  honest  day's 
work  in  their  lives.  Others  are  hired  writers  for  news- 
papers and  magazines,  turned  patriots.  Monopoly  rule 
and  boss  rule  are  twin  evils  to  be  gotten  rid  of  at  once 
and  by  the  same  method.  The  people  whose  interests 
and  inclinations  oppose  them  must  unite.  Probably  the 
organization  in  which  they  unite  will  bear  a  party  name. 
It  is  immaterial  what  the  name  is,  but  it  will  have  to 
be  a  party  from  which  the  bosses  and  monopolists  are 
barred  or  banished.  Such  an  organization  will  be  in- 
vincible, notwithstanding  the  facility  with  which  rail- 
road magnates  and  other  monopolists  come  to  an  under- 
standing and  harmonize  with  each  other  and  with  the 
bosses  for  the  defeat  of  good  government.  Let  past 
differences  and  personal  grievances,  real  or  fancied,  be 
forgotten  until  monopoly,  tyranny,  and  boss  rule,  the 
most  dangerous  foes  the  Republic  ever  had,  are  over- 
thrown. The  proper  procedure  is  suggested  in  the  next 
chapter. 

77 


CHAPTER    IV 

VIEWS   ON    PARTY    FEALTY HOW    TO    OVERTHROW   PARTY 

BOSSES 

The  earnest  insistence  in  preceding  chapters  that 
citizens  should  declare  their  independence  of  party  ma- 
chines and  bosses  did  not  go  to  the  extent  of  assuming 
that  they  would  or  should  ignore  all  other  questions 
than  those  pertaining  to  boss  and  monopoly  rule,  nor  is 
there  any  hope  entertained  that  the  time  will  ever  come 
when  political  contests  will  be  waged  otherwise  than 
under  party  names. 

But  the  overthrow  of  bossism  is  a  duty  encountered 
at  the  threshold  of  any  and  all  independent  and  effective 
party  action.  The  time  to  attend  to  the  boss  is  before 
platforms  are  adopted  and  nominations  made.  The 
voters  of  a  party  can  control  these  and  take  charge  of 
their  parties  by  attending  primary  elections  if  the  law 
or  the  rules  of  the  organization  provide  for  such  elec- 
tions. If  not,  the  voters  of  any  party  may  form  pri- 
mary election  leagues  or  clubs  and  bring  such  influences 
to  bear  upon  those  in  charge  of  the  governing  com- 
mittee of  the  party  as  will  compel  the  holding  of  pri- 
maries, and  then  actively  participate  therein.  But  of 
course  this  will  all  be  so  much  labor  lost  unless  the  right 
men  are  selected  and  consent  to  serve  as  delegates  to 
conventions. 

Where  no  effective  primary  election  law  is  in  force 
in  the  particular  State,  voters  should  direct  their  efforts 
to  the  framing  of  such  a  measure,  and  see  that  no  can- 

78 


VIEWS    ON    PARTY    FEALTY 

didate  is  nominated  to  the  Legislature  who  cannot  be 
depended  upon  to  keep  a  pledge,  and  then  see  that  all 
such  nominees  are  pledged  to  support  such  a  measure. 

It  is  surprising  how  much  a  few  resolute  men  can 
do  in  such  a  cause  if  they  earnestly  enlist  in  it.  In 
1898  there  was  no  primary  election  law  in  California 
that  was  binding  upon  a  party  committee.  The  com- 
mittee might  have  a  primary  held  according  to  rules 
prescribed  by  the  committee,  and  then,  if  the  result  was 
not  satisfactory,  proceed  to  ignore  it  and  appoint  dele- 
gates to  conventions,  or  even  put  up  a  ticket  without  a 
convention.  In  that  year  one  of  the  members  of  a  cer- 
tain party  club  in  San  Francisco,  which  holds  weekly 
meetings  from  year's  end  to  year's  end,  made  the  hith- 
erto unheard-of  motion  that  a  committee  be  appointed 
to  call  an  inter-party  conference  to  frame  a  primary 
election  law.  No  one  objecting,  the  committee  was  ap- 
pointed and  sent  invitations  to  all  party  committees  and 
to  several  other  party  clubs  of  different  parties.  The 
conferences  met  at  the  club  rooms  of  one  of  the  clubs, 
organized,  appointed  a  committee  to  draft  a  bill.  Nu- 
merous meetings  were  held  to  discuss  the  provisions  of 
the  bill  as  reported  by  the  committee.  The  press  took 
up  the  work  of  the  conference,  and  the  public  became 
interested  to  such  a  degree  that  both  the  Democratic  and 
Republican  conventions  of  that  year  adopted  platform 
resolutions  in  favor  of  a  "  compulsory  primary  election 
law,"  to  be  conducted  at  public  expense  upon  the  Aus- 
tralian plan.  By  a  "  compulsory  primary  election  law  " 
is  meant  simply  that  no  candidate  with  a  party  desig- 
nation shall  be  entitled  to  have  his  name  submitted  to 
the  voters  at  a  general  election  unless  previously  nomi- 
nated by  a  convention  composed  of  delegates  elected 
pursuant  to  the  provisions  of  such  primary  election  law. 
When  the  Legislature  met  in  January,  1899,  the  bill 
as   proposed   by   the   conference   passed   with   practical 

79 


BOSS  ISM    AND    MONOPOLY 

unanimity,  without  material  amendment.  Primaries 
were  held  under  it  in  August  of  that  year,  and  seventy- 
five  per  cent  of  the  voters  participated.  The  workings 
of  the  law  were  satisfactory,  except  to  some  of  the  party 
bosses  and  machine  politicians.  It  was  far  the  best  law 
on  this  subject  ever  enacted,  and  is  the  basis  of  all  such 
legislation  elsewhere.  It  provided  for  secret  voting,  but 
without  a  party  test.  After  the  August  primaries,  in 
Fitch  vs.  Board  of  Election  Commissioners,  the  Supreme 
Court  held  that  the  failure  to  provide  a  party  test  ren- 
dered the  whole  act  invalid.  This  decision  was  said  to 
have  resulted  from  pressure  brought  to  bear  upon  cer- 
tain of  the  justices  by  party  bosses  whose  importance 
had  been  greatly  diminished  by  the  operation  of  the 
law.  At  any  rate,  it  had  no  support  other  than  the 
baseless  assumption  that  political  parties  are  substantial 
entities,  in  the  nature  of  voluntary  associations,  and  as 
such  entitled  to  protection  from  control  which  may  be 
acquired  by  "  members  "  of  other  parties  at  the  primary 
polls.  But  the  honored  justice  who  wrote  the  opinion 
made  no  attempt  at  defining  membership  in  a  political 
party.  It  is  a  thing  that  cannot  be  done  so  as  to  stand 
a  legal  or  judicial  test. 

At  the  next  session  of  the  Legislature  a  new  act 
was  passed,  but  the  bosses  and  corporation  lawyers  took 
care  that  control  of  primary  elections  should  be  left 
principally  in  the  hands  of  governing  bodies  of  the 
parties.  Still,  the  present  law  is  a  great  deal  better 
than  none. 

No  recognition  is  given  to  political  parties  in  the 
Federal  Constitution  or  in  any  State  constitution.  And 
in  reality  political  parties  do  not  exist  as  tangible  enti- 
ties. If  one  started  out  to  locate,  define,  and  take  tlie 
measure  of  the  Republican,  the  Democratic,  or  any  other 
party,  where  would  he  look  for  it,  how  could  he  define 
it.f*    What  are  its  authority  and  dimensions.'*     Some  law- 

80 


VIEWS    ON    PARTY    FEALTY 

yers,  if  questioned  on  this  subject,  will  say,  "  Why,  the 
party  committee  is  what  is  known  in  law  as  a  voluntary 
association."  Even  if  that  were  true,  it  would  not  con- 
stitute the  party  which  it  assumes  to  represent  such  an 
association.  Without  statutory  recognition  not  even  the 
party  committee  would  ever  have  been  entitled  to  a 
standing  in  any  court  as  a  legal  entity.  A  voluntary 
association,  in  law,  means  a  permanent  association  of 
individuals  bound  together  by  some  form  of  mutual 
obligation  which  can  be  enforced.  But  where  can  such 
obligation  be  found  in  a  party  committee? 

The  view  that  a  political  party  has  status  as  a  legal 
entity  has  carried  some  of  those  entertaining  that  view  to 
make  the  most  absurd  and  inconsistent  applications  of 
it.  Thus  the  Cincinnati  Enquirer  recently  condemned 
the  Wisconsin  Legislature  for  the  adoption  of  a  primary 
election  law  with  provisions  including  a  direct  vote  on 
candidates  for  the  United  States  Senate,  and  said: 
"  This  attempt  to  secure  the  election  of  senators  by 
popular  vote  is  carrying  to  an  extreme  the  current  fad 
and  heresy  of  legislative  interference  with  private  affairs 
of  a  political  party,  which  is  a  purely  voluntary  organ- 
ization, not  created  or  constituted  by  constitutions  or 
statutes."  The  editor  then  proceeds  to  criticise  law- 
makers generally  for  "  tinkering "  with  the  manage- 
ment of  parties.  It  is  obvious  that  this  line  of  reasoning, 
if  carried  out,  is  a  repudiation  of  the  whole  theory  of 
popular  sovereignty,  and,  while  upholding  government 
by  party,  would  limit  party  control  to  the  will  of  party 
bosses. 

Primary  election  legislation  is  usually  very  imper- 
fect and  fragmentary.  If  proper  codes  of  laws  on  these 
subjects  were  enacted  in  every  State,  the  people  would 
make  less  complaint,  and  would  have  less  cause  for  com- 
plaint on  the  score  of  corrupt  government  resulting 
from  the  rule  of  corporations,  party  bosses,  and  political 

81 


BOSSISM    AND    MONOPOLY 

machines.  Under  a  primary  election  law  protecting  and 
insuring  a  secret  ballot  to  every  voter  for  the  selection 
of  delegates  to  all  party  conventions,  the  reluctance  of 
the  respectable  law-abiding  citizen  to  participate  in 
political  affairs  would  soon  disappear.  Then  if  a  party 
became  corrupt  or  irresponsive  to  the  popular  will,  voters 
affiliating  with  that  party  could  purify  it  without  pub- 
licly going  on  record  to  be  disciplined  by  the  bosses  or 
discriminated  against  by  corporations.  In  addition  to 
such  a  thorough  primary  election  law,  each  State  con- 
stitution should,  when  all  citizens  have  become  accus- 
tomed to  voting  at  the  primary,  prescribe  as  one  of  the 
qualifications  for  voting  at  the  general  election  within 
the  same  year  that  the  voter  should  have  voted  at  the 
primary  election  in  that  year.  Such  constitutional  pro- 
vision would  hardly  be  popular  until  the  people  per- 
fectly realized  the  reformatory  effects  of  the  primary. 
But  that  time  is  not  far  distant. 

Under  the  existing  systems  of  party  rule  such  a 
thing  as  general  participation  by  the  people  in  active 
party  management  is  unknown.  Business  men — and  this 
term  includes  all  having  business  cares  and  responsibili- 
ties— soon  learn  the  lay  of  the  land.  Wlien  they  dip 
into  party  management  without  an  invitation,  which 
they  rarely  receive,  they  are  immediately  made  to  realize 
that  they  are  rank  outsiders,  going  in  where  angels  dare 
not — that  is,  where  those  considerably  lower  than  angels 
dare — to  tread.  The  bosses  and  the  corporation  lawyers 
make  up  a  slate  of  delegates  to  both  party  conventions. 
These  slates  are  ratified  by  the  party  committees,  if 
there  is  no  compulsory  primary  law.  Under  such  slack- 
twisted  primary  laws  as  are  found  in  most  of  the  States 
the  governing  committees  submit  but  one  list  of  dele- 
gates to  the  agglomeration  of  workers,  heelers,  and  bums 
at  present  permitted  to  constitute  the  electorate  at  the 
primary.     Very  seldom  is  there  any  successful  opposi- 

82 


VIEWS    ON    PARTY    FEALTY 

tion  to  the  state  for  delegates.  The  practice  is  sub- 
stantially the  same  in  both  leading  parties. 

The  first  essential  step  in  consummating  any  reform 
in  the  United  States  will  be  the  placing  on  the  statute 
books  of  at  least  a  majority  of  the  States  a  compulsory 
primary  election  law.  It  would  be  much  better  if  party 
tests  could  be  dispensed  with  at  primary  elections ;  but, 
according  to  a  California  decision,  most  State  consti- 
tutions would  have  to  be  amended  to  permit  of  the  use 
of  a  ballot,  secret  with  respect  to  party  affiliations. 

Notwithstanding  that,  as  before  explained,  our  Fed- 
eral Constitution  discriminates  against  the  general  elec- 
torate and  in  favor  of  politocracy,  yet  the  people  have 
the  knack  of  finding  a  way  around  obstacles  to  a  direct 
expression  of  their  will.  Deprived  of  an  opportunity 
of  voting  for  presidential  candidates,  they  have,  by  com- 
mon consent  and  uniform  practice,  created  a  political 
law  that  presidential  electors  must  vote  for  the  candi- 
dates for  President  and  Vice-President  nominated  by  the 
party  which  nominated  them.  So  strongly  is  this  un- 
written and  unenforceable  law  supported  by  public  opin- 
ion that  in  no  instance  since  the  organization  of  parties 
has  an  elector  dared  to  violate  it,  except  in  one  instance, 
where  the  candidate  died  before  the  electoral  votes  could 
be  cast,  and  in  that  case  obedience  was,  of  course,  im- 
possible. So,  although  the  task  of  changing  the  Con- 
stitution in  order  to  inaugurate  needed  reforms  cannot 
be  done  by  direct  methods,  yet  the  people  have  found  a 
way  to  accomplish  the  same  end.  Some  of  the  States 
are  taking  the  lead ;  it  is  hoped  that  in  a  short  time  we 
shall  see  others  following  their  example.  The  people 
may  just  as  effectually  exercise  their  voting  power  to 
select  United  States  senators  as  in  electing  members  of 
their  State  legislatures.  In  the  Southern  States  the  con- 
test for  the  dominant  party's  candidate  for  senator  at 
the  primary  is  as  real  and  as  fairly  conducted  as  are 

83 


BOSSISM    AND    MONOPOLY 

the  best  supervised  elections  for  State  and  county  officers. 
The  example  thus  given  by  the  Southern  States  fur- 
nishes a  workable  plan  for  all  the  States,  Wisconsin,  at 
the  last  presidential  election,  indorsed  by  a  large  popu- 
lar majority  a  law  under  which  the  voter  records  his 
choice  for  party  nominees  for  United  States  senators 
with  the  same  binding  force  and  effect  as  for  other  offi- 
cers. Members  of  the  Legislature  of  that  State  would 
no  more  dare  to  ignore  the  choices  of  their  respective 
parties  for  senator  as  expressed  at  a  primary  election 
held  under  the  provisions  of  that  law  than  would  the 
presidential  electors  chosen  at  the  same  election  have 
dared  vote  for  some  candidate  for  President  not  nom- 
inated by  their  party.  Illinois  has  put  in  force  a  similar 
statute.  South  Dakota  has  taken  steps  to  follow  the 
example  of  Wisconsin  and  Illinois,  and  the  reformatory 
forces  in  some  other  States  are  laboring  to  the  same 
end.  There  is  a  strong  probability  that  some  political 
laws  of  a  far-reaching  character  are  about  to  be  estab- 
lished in  spite  of  the  senatorial  barricade. 

But  the  people  of  any  State  who  are  really  in  ear- 
nest for  a  change  need  not  wait  for  a  primary  election 
law.  They  may  by  agitation  bring  so  much  pressure 
to  bear  upon  party  committees  that  the  latter  will  be 
compelled  to  submit  the  question  of  the  senatorship  at 
primaries,  as  well  as  provide  a  plan  of  conducting  the 
primary  which  will  give  each  person  desiring  to  vote 
an  opportunity  to  do  so.  But  the  enactment  of  com- 
pulsory primary  election  laws  should  be  an  end  not  for 
an  instant  lost  sight  of.  Such  a  law  will  be  a  safeguard 
against  a  reaction  to  the  old  machine  tricks  and  prac- 
tices after  the  vigilance  of  the  better  elements  in  the 
party  has  relaxed. 


84) 


CHAPTER    V 

ABUSES  OF  PRIVILEGE  BY  MUNICIPAL-SERVICE  MONOP- 
OLIES AND  THEIR  POLITICAL  ANNEXES,  THE  PARTY 
BOSSES 

I. How     THE     PEOPLK     DIVIDE    INTO    PARTIES    AND    ARE    LED   AND    PIL- 
LAGED BY  CORRUPT  PARTV  LEADERS 

II. — Acceptance  of  false  standards  for  rate-fixing  purposes 
III. — Instances  of  overcapitalization  and  high  rates 
IV. — Swindling  through  false  meters 

V. — Workings  of  the  boss  monopoly  regime  in  particular  cities 
VI. — Gigantic   absorption  contemplated  by  the  North  American 
Company 

I.  How  the  people  divide  into  parties  and  are  led  and 
pillaged  hy  corrupt  party  leaders 

It  is  said  that  prisoners  who  have  worn  shackles  on 
their  limbs  during  long  terms  of  imprisonment  become 
so  accustomed  thereto,  habitually  adapting  their  physi- 
cal movements  to  the  physical  encumbrance,  that  they 
scarcely  know  how  to  move  about,  and  actually  experi- 
ence pain  in  attempts  at  locomotion  after  gaining  their 
freedom  from  restraint.  It  may  be  the  dread  of  some 
such  experience  that  has  reconciled  the  people  so  long 
to  the  dominance  of  the  political  machines  in  municipal 
politics. 

Just  how  long  the  people  have  permitted  themselves 
to  be  divided  into  herds  and  branded,  some  with  the 
brand  of  "  Democrat,"  others  "  Republican,"  etc.,  as  a 
step  in  the  process  of  electing  city  officers  and  conduct- 
ing municipal  affairs,  it  might  be  difficult  to  ascertain. 
But  a  more  stupid,  wasteful,  and  demoralizing,  and  we 

85 


BOSSISM    AND    MONOPOLY 

might  even  say  barbarous,  system  it  would  be  difficult 
to  imagine.  In  the  long-ago  beginning  of  organized 
government  the  people  divided  into  tribes,  each  choosing 
the  strongest  for  headman  or  chief.  When  the  members 
of  a  particular  tribe  became  rebellious  under  heavy  bur- 
dens, they  were  pacified  by  being  led  as  an  armed  force 
against  a  neighboring  tribe,  whom  they  sought  to 
butcher  without  mercy  though  without  malice;  and,  if 
victorious,  they  were  allowed  to  feast  upon  the  spoils  of 
victory.  So  in  our  up-to-date  cities,  the  corrupt  bosses 
and  leaders,  wearing  the  collars  of  public-service  mo- 
nopolies, borrow  national  party  names,  step  to  the  front, 
and  lead  the  divided  masses  against  each  other  at  the 
polls.  The  difference  is  that  the  ancient  chiefs  rewarded 
their  followers  with  the  loot  wrenched  by  force  from  the 
prostrate  forms  of  the  opposition,  and  there  was  main- 
tained at  least  a  show  of  fairness  and  equality  in  the 
division,  whereas  the  modern  boss,  at  the  end  of  a  politi- 
cal contest  in  which  his  forces  outnumber  the  opposition 
and  capture  the  rich  spoils  of  office  and  opportunity, 
steals  the  loot  from  a  common  fund  exacted  from  both 
friend  and  foe.  Nor  is  the  division  general,  nor  is  it 
made  to  the  most  valiant  among  his  following.  The 
qualities  which  entitle  the  favored  ones  to  partake  are 
not  such  as  would  commend  their  possessors  to  the  elec- 
torate were  the  latter  not  divided  into  clans,  whereby 
it  becomes  impolitic, to  scrutinize  too  closely  the  char- 
acters and  records  of  office-seekers  and  their  appointees. 
But  wherefore  this  bringing  forth  the  party  slogans 
and  rending  the  air  with  declamatory  appeals  to  party 
prejudice?  Whatever  there  has  been  of  party  enthusi- 
asm or  maneuvering  during  the  campaign  vanishes  at 
the  closing  of  the  polls,  leaving  scarcely  a  whisper  in 
its  wake. 

Dr.  John  H.  Girdner,  discussing  a  kindred  subject 
in    a   recent   issue   of   Tom   Watson's  Magazine^   says: 

86 


ABUSES    OF    PRIVILEGE    BY    MONOPOLIES 

"  The  political  eagles  that  feed  on  the  franchise  carcass 
have  a  different  way  of  deceiving  the  people.  They 
organize  themselves  into  what  they  call  a  political  party, 
and  by  working  three  hundred  and  sixty-five  days  in 
the  year,  while  other  men  are  attending  to  their  legiti- 
mate business,  they  get  control  of  the  legal  political 
machinery  of  one  of  the  great  national  parties.  The 
name  by  which  they  call  their  organization  will  depend 
on  the  particular  city  they  are  operating  in.  In  New 
York,  for  instance,  they  call  themselves  Democrats,  not 
because  they  know  or  care  anything  about  the  principles 
of  democracy,  but  because  a  majority  of  the  independ- 
ent voters  are  Democrats,  and  then  they  secure  the  votes 
to  elect  their  candidates  from  the  very  people  they  intend 
to  despoil  once  they  get  in.  For  a  similar  reason,  the 
political  eagles  of  Philadelphia  call  their  organization 
Republican.  If  the  majority  of  the  voters  of  any  city 
favored  prohibition,  you  would  have  that  city's  organized 
political  eagles  calling  themselves  Prohibitionists.  New 
York,  Philadelphia,  Chicago,  St.  Louis,  every  city  in 
this  country  which  has  a  fat  franchise-wealth  carcass, 
has  its  corporation  and  political  eagles  gathered  to- 
gether to  devour  it." 

Indeed,  the  important  question  in  these  contests  is 
not  whether  one  set  of  candidates  bearing  a  certain 
party  label  or  another  bearing  another  label  ought  to 
be  elected,  however  sincerely  the  voters  believe  or  the 
leaders  declare  so.  Two  other  issues  or  consummations 
are  of  vastly  more  importance.  First,  that  the  candi- 
dates be  honest  and  free  from  sinister  influences  and 
pledges,  and,  secondly,  that  they  have  the  intelligence 
and  courage  to  conserve  the  interests  of  their  constitu- 
ents. But  rarely  do  the  voters  have  an  opportunity  to 
elect  such  men  to  office,  even  if  able  to  rise  above  par- 
tisan bias.  It  seldom  happens,  either  in  national,  State, 
citv,  or  county  government,  that  a  notorious  rogue  or 
7  87 


BOSSISM    AND    MONOPOLY 

a  man  of  bad  repute  is  elected  to  public  office.  The 
reason  is  that  politics  is  a  stage  whereon  actors  play 
their  parts  each  with  more  or  less  success,  according  to 
the  dramatic  ability  of  the  place-seeker  and  his  adapta- 
bility to  the  particular  role.  So  there  will  be  found  in 
each  community  a  class  of  professionals,  that  is  to  say 
men  who  make  the  displaying  of  superior  honesty  or 
patriotism,  or  of  some  public  virtue,  a  business.  You 
will  find  another  class  who  may  lack  the  "  face  "  for 
that  kind  of  posing,  so  they  work  overtime  playing  the 
agreeable.  They  are  noncommittal  under  all  circum- 
stances, no  matter  how  urgent  the  call  for  an  expression, 
if  there  happens  to  be  a  difference  of  opinion  and  if 
inconvenient  hostilities  might  be  aroused  by  an  intima- 
tion of  their  views.  They  are  not  only  timeservers,  but 
are  as  colorless  among  men  of  thought,  sentiment,  and 
real  character  as  plants  sprouted  in  a  cellar.  From 
these  classes  are  selected  for  their  availability  the  can- 
didates whom  the  herds  that  follow  the  party  leaders 
elect  to  public  office  and  provide  with  the  opportunity 
which  public  office  affords.  The  first  class  are  hypo- 
crites, and  the  second  class  moral  cowards.  Both  are 
extremely  selfish  and  unscrupulous,  neither  knowing  nor 
caring  for  any  distinction  between  virtuous  ambition  and 
the  lust  for  power  and  pelf.  We  may  ask  the  question, 
Why  are  such  men  nominated?  This  question  is  best 
answered  by  asking  and  answering  another:  How  are 
they  nominated?  Before  receiving  the  nomination  one 
has  to  pass  muster  with  the  public-service  monopolists 
and  bosses.  Beyond  that  answer  inquiry  need  not  be 
extended.  Of  course  men  outside  the  above-described 
classes  are  often"  nominated  without  having  to  read  and 
approve  the  boss's  catechism;  but  sometimes  even  then 
it  is  because  the  dual  powers  know  their  characters  so 
much  better  than  the  public  that  they  arc  willing  to  take 
them  on  trust, 

88 


ABUSES   OF   PRIVILEGE    BY   MONOPOLIES 

It  is  a  remarkable  and  deplorable  fact  that  the  con- 
ditions under  which  the  people  thus  play  an  insignificant 
part  politically  are  not  obscure  and  unknown  to  them, 
but  are  given  the  widest  publicity ;  and  instead  of  being 
subjects  of  indignant  but  incessant  clamor  and  agita- 
tion, are  silently  accepted  and  acquiesced  in  by  the  vast 
majority.  Public  franchises  are  appropriated,  public 
moneys  wasted  or  stolen,  malfeasances  are  of  daily  oc- 
currence, though  of  only  occasional  detection  and  expos- 
ure ;  thieves  go  into  office  poor  and  retire  rich,  the  cream 
of  all  the  profits  of  business  is  taken  off  by  the  compara- 
tively few  who  control  local  public  service  and  municipal 
finance.  The  people  accept  from  force  of  habit  the 
dogma  that  stolen  property  becomes  vested  property 
when  stolen  from  the  common  hoard,  and  of  sufficiently 
large  value.  They  have  become  reconciled  to  enormous 
frauds  in  dealing  with  public  affairs  which  ought  to 
arouse  them  to  almost  as  high  a  pitch  of  indignation  as 
if  a  foreign  enemy  landed  on  our  shores. 

The  "  good "  people  of  this  country,  locally  and 
nationally,  are  herded  into  parties,  while  the  "  bad  " 
people,  the  grafting  and  bribe-hungering  gangs,  are 
rounded  up  by  bosses,  ready  to  be  sold  en  masse  or  en 
bloc  to  the  corporations,  to  be  voted  on  election  day  as 
the  corporations  deem  most  to  their  interest.  Tliose 
among  us  who  pride  ourselves  upon  having  voted  the 
straight  Republican  or  Democratic  ticket  consistently  (  ?) 
all  our  lives  have  "  doped  "  ourselves  with  a  lot  of  no- 
tions called  political  convictions,  commendable  enough  if 
we  took  necessary  precautions  in  time  to  select  men  for 
office  who  could  be  depended  upon  to  spurn  the  boss  and 
the  monopoly  bribe  and  stand  for  our  principles  after 
election.  But,  as  a  nile,  we  begin  to  spread  ourselves 
on  principle  after  it  has  been  already  sacrificed  at  the 
primary  or  convention,  and  the  boss  has  sold  our  votes 
to  his  twin-brother  tyrant.     When  not  so  disposed  of, 

89 


BOSSISM    AND    MONOPOLY 

our  votes  are  smothered  after  the  nominations  are  made 
by  the  boss  and  his  brigade  of  bums  and  grafters,  held 
in  reserve,  ready  to  be  traded  to  the  monopohes  and 
voted  against  us.  True,  they  may  be  voted  for  our 
ticket,  but  if,  in  the  deal  between  the  boss  and  the  mo- 
nopoly, the  bums  and  grafters  go  into  the  scales  on  our 
side,  our  only  consolation  is  that  our  boss  and  our  candi- 
date will  have  an  opportunity  to  cut  and  divide  the 
boodle  carcass,  rather  than  those  of  the  other  party. 
These  are  the  inducements  and  that  is  the  way  we  "  keep 
up  the  organization,"  when  honest  partisans  fail  to  par- 
ticipate at  the  primaries,  refuse  to  stand  as  delegates 
to  conventions,  and  leave  the  party  management  in  the 
hands  of  the  boss  and  his  political  chattels. 

It  may  be  said  that  rogues  would  sometimes  go  into 
office  even  if  the  people  more  actively  and  independently 
participated  in  part}^  management  at  primary  elections 
and  otherwise.  There  is  more  or  less  truth  in  this  state- 
ment, but  no  one  or  two  dishonest  men,  holding  office  in 
a  community  where  all  other  public  officers  are  honest, 
could  establish  a  system  of  boodling  and  bribery.  To 
escape  detection  they  must  work  by  system,  with  a  boss 
as  a  go-between,  in  order  to  effect  the  purpose  of  the 
bribe-giver,  especially  where,  as  is  usually  the  case,  the 
latter  is  a  corporation.  Nor  is  it  true,  as  a  rule,  that  the 
candidates  put  up  by  bosses  are  dishonest  prior  to  their 
nomination.  They  are  forced  to  forfeit  independence 
and  to  stultify  themselves  in  advance  of  election  in  order 
to  obtain  party  nominations.  That  is  to  say,  they  must 
agree  to  serve  the  boss  and  his  clique  rather  than  the 
people.  The  boss  rarely  wants  a  man  so  dishonest  as 
to  misappropriate  public  funds. 


90 


ABUSES    OF    PRIVILEGE    BY    .MONOPOLIES 

II.  Acceptance  of  false  standards  for  rate-fixing 
purposes 

Once  every  year  the  question  of  fixing  rates  for 
water,  gas,  and  electric  lighting  companies  comes  before 
the  various  city  councils,  boards  of  aldermen,  or  other 
legally  designated  body,  by  whatever  name  designated. 

The  question  of  a  reasonable  rate  must  be  then  con- 
sidered. What  follows  has  direct  bearing  as  well  upon 
the  question  of  a  just  price  where  property  of  a  public- 
service  corporation  is  taken  over  by  a  municipality,  or 
a  state,  or  the  nation,  as  upon  the  question  of  a  rea- 
sonable rate  where  the  same  property  remains  in  private 
hands.  We  will  suppose  the  rate-fixers  to  have  been 
nominated  to  office  by  the  monopoly  agents  and  bosses 
according  to  the  usual  practice.  They  then  accept  with- 
out question  the  premises  and  figures  of  the  monopolies 
as  a  basis  for  passing  upon  rates.  Two  claims  are 
made:  First,  that  interest  on  the  bonds,  expenses  of 
management,  repairs,  and  betterments  must  be  provided 
for;  second,  that  provision  must  be  made  for  dividends 
to  the  stockholders,  the  equivalent  of  profits  from  the 
business. 

The  false  major  premise  supporting  the  claim  thus 
presented  upon  all  such  occasions  is  the  proposition  that 
the  Government  must  accept  and  recognize  unchallenged 
the  exclusive  monopoly  privilege  of  the  claimant  to  oc- 
cupy the  territory  and  levy  and  collect  from  all  dwellers 
therein  some  aggregate  amount,  measured  by  a  stand- 
ard which  the  latter  had  no  hand  or  voice  in  creating. 
To  illustrate,  we  will  take  a  city  like  San  Francisco  and 
its  gas  monopoly  as  an  exemplar  of  its  dealings  with 
all  service  corporations.  We  find  there  a  gas  company 
whose  rate  is  fixed  by  an  acommodating  board  of  super- 
visors at  $1.25  per  1,000.  That  rate  will  yield  a  sum 
equivalent  to  repairs,  extension,  expenses,  management, 

91 


BOSSISM    AND    MONOPOLY 

interest  on  $10,000,000  of  bonds  at  five  per  cent,  and 
dividends  of  six  per  cent  on  a  stock  capitalization  of 
$20,000,000.  So  servile,  so  indifferent  to  the  interests 
of  the  people,  so  stupid  when  it  comes  to  measuring 
strength  with  the  agents  of  the  gas  company,  if  not 
something  worse,  are  the  supervisors,  that  they  accept 
without  investigation,  or  after  merely  farcical  investi- 
gation, the  figures  presented  by  the  attorneys  for  the 
company  to  justify  the  capitalization,  and  begin  with 
an  enormously  false  basis  for  calculation.  Now,  in  the 
first  place,  a  city  must  resolve  itself  into  an  insurance 
company  and  constantly  maintain  that  relation  before 
it  recognizes  any  measure  of  return  to  the  company 
whatever.  The  true  and  sensible  attitude  of  all  govern- 
ments toward  public-service  corporations  would  be  that 
of  a  free  agent  in  the  market  to  procure  at  the  lowest 
available  price  an  essential  commodity,  ready,  if  neces- 
sary, to  deny  the  use  of  its  streets  to  any  one  company 
and  to  sell  the  right  to  another  or  to  use  them  in  con- 
nection with  a  new  plant  to  be  constructed  by  itself. 
Occupying  this  independent  relation,  the  existence  of 
the  monopoly,  and  the  presence  of  its  works  and  system 
in  the  streets,  and  its  present  facilities  for  rendering  the 
service,  should  be  given  some  consideration,  but  should 
not  be  by  any  means  determinative.  Yet,  almost  uni- 
versally, city  councils  and  boards  of  supervisors  bend 
the  knee  of  thrifty  servitude  to  the  existing  monopolies 
as  if  the  individual  members  were  before  a  giant  who, 
with  sword  in  hand,  commands  them  to  stand  and  de- 
liver, they  giving  countenance  to  the  monopoly  status 
just  as  if  it  were  the  most  natural  and  well-ordered 
arrangement  which  modern  civilization  has  produced. 
To  fully  understand  the  enormity  of  the  imposition  thus 
inflicted  upon  the  people,  we  will  explain  the  history  of 
the  San  Francisco  gas-  and  electric-light  monopoly,  and, 
with  proper  modifications  of  names  and  figures,  it  will 

92 


ABUSES   OF    PRIVILEGE    BY   MONOPOLIES 

f^erve  as  the  history  of  every  pubHc-servIce  monopoly  in 
the  country.  It  started  with  an  investment  of  $25,000. 
For  a  few  years  it  had  competition,  during  which  rates 
were  reasonable  and  service  good,  without  any  sort  of 
municipal  control.  Then,  this  being  the  strongest  com- 
pany, it  absorbed  the  others.  Having  thus  gained  a 
monopoly,  it  raised  the  rates  by  rapid  strides,  and  thus 
accumulated  enough  money  to  pay  the  original  cost  of 
all  the  plants,  in  addition  to  paying  dividends  at  the 
rate  of  from  twelve  to  sixteen  per  cent.  It  then  created 
a  bonded  indebtedness  and  borrowed  $10,000,000,  with 
which,  without  cost  for  franchises,  it  greatly  enlarged 
its  works  and  entire  system,  meantime  replacing  its 
old  material  with  new  and  replacing  old  processes  with 
modern.  The  franchises,  which  were  obtained  by  the 
grace  of  subservient  predecessors  of  the  present  officials, 
did  not  cost  the  company  one  cent  that  ever  went  into 
the  city  treasury,  and  yet  they  figured  for  millions  of 
value  as  security  for  loans.  Thus  the  original  plant 
was  paid  for  out  of  the  profits,  besides  paying  the  divi- 
dends before  enlargement,  and  the  enlarged  system  was 
paid  for  with  the  money  borrowed  on  the  bonds.  Two 
important  facts  appear.  First,  the  property  repre- 
sented by  the  stock,  and  upon  which  dividends  are  now 
and  have  always  been  paid,  did'  not  cost  the  original 
holder  one  cent;  second,  the  lenders  of  the  money  for 
which  the  bonds  were  issued  considered  the  franchises 
as  their  most  valuable  security,  and  knew  that  unless 
the  monopolistic  status  of  the  company  could  be  main- 
tained they  had  no  adequate  security.  But  in  assuming 
its  continuance  they  took  chances  upon  all  future  city 
governments  being  corrupt  or  stupid  and  indifferent  to 
public  interest.  This  follows :  If  the  people  have  enough 
energy  and  self-assertion  left  to  crush  party  machines 
and  elect  a  city  government  of  courageous  and  honest 
men,  the  city  government  thus  elected  will  feel  no  moral 

93 


BOSSISM    AND    MONOPOLY 

obligation  to  guarantee  dividends,  or  betterments,  or 
interest  on  bonds,  or  repairs,  or  expenses.  They  will 
acknowledge  no  obligation  except  to  the  electorate,  and 
will  seek  to  solve  one  problem  only — how  to  obtain  all 
required  public  service  at  the  lowest  price.  To  that 
end  they  will  take  immediate  steps  to  construct  munici- 
pal works,  using  the  streets  to  the  best  advantage,  and 
profiting  by  all  recent  discoveries  in  economizing  pro- 
duction and  all  improvements  in  mechanics.  If  the 
existing  monopoly  will,  pending  the  construction  of  a 
municipal  system,  offer  the  commodity  at  a  greatly 
reduced  price,  very  well;  if  not,  let  it  shut  down  and 
sell  its  pipes  and  machinery  as  scrap  iron,  or  make  a 
dicker  with  the  city  to  take  it  over  at  what  it  would  cost 
to  buy  the  material  in  the  open  markets  of  the  world 
and  put  it  in  place,  allowing  nothing  for  monopoly 
status,  nothing  for  franchises,  nor  considering  the  views 
of  bondholders  or  stockholders  as  to  the  value  of  their 
holdings.  These  terms  may  appear  harsh  upon  first 
impression,  but  let  us  analyze  the  relations  of  the  par- 
ties. Let  us  place  the  city  where  it  ought  to  stand  as 
a  wholesale  consumer  of  a  commodity  of  common  neces- 
sity, just  as  a  large  manufacturing  plant  is  a  consumer 
of  iron.  In  the  illustration  we  will  suppose  that  one 
iron  company  has  enjoyed  its  custom  heretofore,  but  it 
finds  that  it  can  now  do  better  by  placing  its  orders 
elsewhere.  Would  it  be  under  any  obligations  to  investi- 
gate, or  in  any  way  would  it  be  bound  to  consider  the 
proposition  that  by  making  the  change  it  was  depre- 
ciating the  security  of  the  iron  company's  bondholders, 
or  endangering  the  profits  (dividends),  or  destroying 
the  value  of  the  titles  (stocks)  of  its  owners.?  To  hold 
otherwise  is  to  hold  the  manufacturing  company  to  the 
responsibilities  of  an  insurer  of  the  property  and  guar- 
antor of  the  profits  of  the  iron  company,  a  proposition 
which  would  fail  of  support  in  law  and  in  morals,  and 

94 


ABUSES    OF    PRIVILEGE    BY    MONOPOLIES 

be  considered   absurd   and   nonsensical   among  business 
men. 

Let  us  view  it  from  another  standpoint.  There  is 
in  San  Francisco  a  money  lender  who  lends  money  on 
real  estate,  while  another  lends  to  a  gas  company. 
Where  is  any  obligation  of  the  city  at  large  to  insure 
the  one  any  more  than  the  other  against  a  depreciation 
in  value  of  the  security  and  loss  of  interest?  So  there 
may  be  stockholders  in  a  corporation  owning  a  dry-goods 
store  and  the  stockholders  of  a  gas  company ;  why  should 
the  people  at  large  be  taxed  to  give  a  profit  to  the 
owners  of  the  gas  company  and  not  to  the  other  corpo- 
ration.'' If  the  latter  were  attempted,  the  socialists  could 
have  a  better  ground  for  objecting  than  the  class  who 
usually  object  to  municipal  ownership  on  the  score  of 
its  socialistic  tendency.  The  real  attitude  of  the  latter 
is  that  of  defenders  of  special  privilege,  and  not  that 
of  anti-socialists.  These  illustrations  and  deductions 
hold  good  with  reference  to  all  other  rate-fixing  propo- 
sitions, whether  in  San  Francisco  or  elsewhere.  Any 
business  man  would  like  to  invest  $10,000  in  property 
and  receive  two  and  one-half  times  the  profit  enjoyed 
by  his  neighbors  who  have  invested  the  same  amount 
and  have  all  his  neighbors  and  business  rivals  guarantee 
such  profits.  Here  is  the  gas-  and  electric-light  com- 
pany given  that  advantage  on  a  large  scale  by  the  favor 
of  the  municipal  government. 

III.  Instances  of  overcapitalization  and  high  rates 

The  United  Railways  of  San  Francisco  in  the  year 
ending  December  31,  1904,  showed  net  earnings  of  $2,- 
664,507.  Out  of  tliis  sum  $1,533,415  was  distributed 
for  interest,  $257,052  to  sinking  funds,  $600,000  in 
dividends,  and  $161,353  for  depreciation  of  equipment, 
leaving  a  surplus  of  $143,357  from  one  year's  opera- 

95 


BOSSISM    AND    MONOPOLY 

tions.  Here  we  see  the  financial  scheme  of  the  company 
to  be  such  that  while  the  requirements  of  the  sinking 
fund,  created  for  getting  rid  of  the  indebtedness,  are 
satisfied  with  a  little  over  a  quarter  of  a  million  dollars, 
more  than  twice  the  amount  is  withdrawn  as  dividends 
on  watered  stock.  And  yet  one  of  the  leading  papers 
of  the  city,  in  which  these  figures  were  published,  con- 
gratulated its  readers  on  the  prosperity  of  its  street- 
railway  system. 

In  San  Francisco  the  movement  for  a  municipal 
water  supply  must  soon  reach  a  practical  result.  The 
existing  monopoly  is  actively  preparing  a  scheme  to 
more  firmly  fasten  itself  upon  the  people  and  force  them 
to  furnish  an  income  on  a  capitalization  of  $56,000,000, 
more  than  one-half  of  which  is  pure  inflation. 

Another  illustration  of  the  enormous  abuses  of  over- 
capitalization is  seen  in  the  case  of  the  Chicago  street 
railways.  Experts  have  shown  that  the  tangible  assets 
of  the  Chicago  street  railways,  now  about  to  be  taken 
over  by  that  city,  are  of  a  value  not  greater  than 
$27,000,000.  And  yet  they  are  capitalized  at  over 
$110,000,000.  The  stock  alone,  which  may  all  be  con- 
sidered as  representing  water,  or  excess  of  capitalization 
over  cost,  is  given  a  combined  valuation  in  recent  quota- 
tions on  the  New  York  Stock  Exchange  of  $80,000,000. 
And  this  represents  only  the  two  chief  companies.  The 
citizens  of  Chicago  are  to-day  involuntary  guarantors 
of  dividends  on  this  exaggerated  valuation.  What 
would  they  say  if,  upon  a  consolidation  of  various  retail 
mercantile  establishments  of  the  city  into  a  department 
store,  they  were  called  upon  to  guarantee  to  each  of  the 
consolidatory  firms  the  same  profits  out  of  the  new  con- 
cern that  it  realized  before  the  consolidation?  And  yet 
that  would  be  no  more  unreasonable  than  the  claim  put 
forward  by  the  stockholders  of  Chicago's  traction  com- 
panies, and  of  stockholders  of  public-service  companies 

96 


ABUSES    OF    PRIVILEGE    BY    MONOPOLIES 

generally,    that    governments    should    place    valuations 
upon  properties  that  will  insure  them  against  loss. 

No  veonder  Interborough  stock  is  closely  held  by  the 
Belmont-Rothschild  syndicate  at  150  to  200.  They 
expect  to  receive  at  least  fifteen  per  cent  dividends. 
What  did  the  stock  cost  them?  Not  one  cent.  Remem- 
ber, the  Subway  was  constructed  with  money  borrowed 
on  the  credit  of  the  city.  While  the  New  York  "  con- 
servative "  newspapers  were  filling  their  columns  with 
accounts  of  monopoly  abuse  in  Kansas  and  the  efforts 
of  the  Kansas  Legislature  to  throw  off  the  Standard  Oil 
incubus,  they  might  have  given  good  reasons  for  a  simi- 
lar movement  nearer  home.  Notwithstanding  the  fact 
that  the  stock  of  the  Gas  Trust  (a  Standard  Oil  asset) 
is  two-thirds  water,  it  annually  extorts  enough  from 
consumers  to  pay  ten  per  cent  dividends  and  is  accumu- 
lating a  vast  surplus.  Last  year  it  passed  over  to  the 
surplus  fund  enough  to  have  paid  an  additional  dividend 
of  ten  per  cent.  The  stock  of  the  Electric  Lighting 
Trust  (also  a  Standard  Oil  asset)  is  largely  Inflated, 
and  yet  it  collects  one  hundred  per  cent  annual  profits. 
The  rates  for  electric  lighting  in  New  York  are,  all 
things  considered,  higher  for  small  consumers  than  in 
any  other  of  our  large  cities,  although,  on  account  of 
the  topography,  cheapness  of  production,  and  magni- 
tude of  consumption,  they  should  be  less  than  in  any  city. 
It  was  developed  in  the  investigation  of  the  Gas  Trust 
of  New  York  City  that  the  Consolidated  Gas  Company 
buys  most  of  its  gas  from  subsidiary  companies,  paying 
for  it  from  thirty-six  to  forty  cents  per  thousand  feet 
and  selling  it  to  its  own  consumers  at  $1  per  thousand. 
Of  course  the  subsidiary  companies  realize  a  handsome 
profit,  and  the  sixty  cents  per  thousand  realized  thereon 
by  the  trust  is  nearly  all  clear  profit,  since  its  only  ex- 
pense Is  that  of  pumping  tlu'ough  its  mains  and  the 
cost  of  management.     Could  municipal  ownership  in  the 

97 


BOSSISM    AND    MONOPOLY 

crudest  form  imaginable  be  a  heavier  burden  on  the  peo- 
ple than  that  imposed  upon  them  by  the  trust? 

Mr.  Andrew  Carnegie  advances  the  argument  so 
often  advanced  by  the  advocates  of  the  single  tax.  In 
a  recently  published  interview  he  said :  "  A  franchise  in 
New  York,  for  instance,  is  made  valuable  by  no  indi- 
vidual and  no  corporation ;  she  makes  it  valuable  by  her 
own  growth,  and  the  benefits  therefrom  belong  to  the 
city.  So  with  gas  and  electricity.  I  do  not  know  any 
town  or  city  in  Great  Britain  which  does  not  own  both." 

For  a  full  service  of  5,000  telephone  calls  the  New 
York  subscriber  pays  $246  per  year,  which  is  consider- 
ably more  than  is  paid  in  any  other  city.  And  in  the 
collection  of  extra  fees  from  subscribers  for  connections 
between  different  parts  of  the  same  city  nothing  is  found 
to  equal  the  extortion  practiced  by  the  New  York  mo- 
nopoly. Competition  has  reduced  telephone  charges  in 
some  cities,  though  it  is  a  peculiarity  of  the  business 
that  where  there  is  more  than  one  company  operating 
in  the  same  city,  one  must  keep  the  receivers  of  both  or 
all  in  order  to  have  the  benefit  of  full  telephone  service. 
It  is  one  instance  in  which  there  appears  to  be  essentially 
a  genuine  public  convenience  and  economy  in  monopoly, 
and  for  the  same  reason  the  business  should  be  in  the 
hands  of  the  municipality.  In  Great  Britain,  the  tele- 
phone is  municipally  owned  and  conducted  in  many 
cities,  including  Glasgow,  where  the  charge  for  unlim- 
ited service  is  $26.25  per  annum,  with  a  surplus  of 
$10,460,  after  providing  for  interest  on  loans  and  oper- 
ating expenses.  Why  do  not  New  York  and  all  other 
American  cities  become  aroused  to  the  necessity  for 
action  toward  the  overthrow  of  this — the  most  exacting 
and  tantalizing  despotism? 

The  people  have  learned  that  no  honest  motive  is 
behind  stock-watering  by  a  public-service  corporation. 
It  is  done  in  order  that  the  surface  of  the  capital  may 

98 


ABUSES    OF    PRIVILEGE    BY    MONOPOLIES 

be  broadened,  and  that  a  large  dividend  may  be  spread 
out  over  it  very  thin  and  thus  appear  smalL  Such  com- 
panies sometimes  use  a  large  part  of  their  receipts  for 
the  purpose  of  additional  land  and  other  property  that 
is  not  presently  needed,  but  is  considered  by  them  neces- 
sary to  buttress  their  monopoly.  Then  they  declare  a 
small  dividend,  and  plead  poverty  and  meager  income 
in  order  to  obtain  a  raise  of  rates.  And  it  is  much  to 
be  regretted  that  even  honest  aldermen,  supervisors,  rail- 
road boards  of  regulation,  and  even  the  public,  are  often 
deceived  by  such  practices.  Thus  three  or  five  per  cent 
a  year  is  the  profit  the  public  sometimes  believes  a  mo- 
nopoly is  earning,  when  in  fact  it  is  fifty  or  one  hundred 
per  cent  on  the  investment. 

IV.  Swindling  through  false  meters 

The  rigging  up  of  the  gas  meters  and  mechanism 
for  measurements  of  gas  and  electricity  supplied  is  a 
fine  art.  None  but  experts  understand  or  are  capable 
of  understanding  their  workings.  The  people  delude 
themselves  into  the  belief  that  a  municipal  ordinance 
fixing  maximum  rates  for  these  services  is  a  barrier  to 
extortion,  except  that  they  believe  the  maximum  so  fixed 
is  too  high.  So  patient  and  credulous  are  consumers 
that  they  refuse  to  believe  that  burdens  are  being  laid 
upon  them  equal  to  twice  and  sometimes  five  times  the 
amount  which  such  ordinances  sanction.  And  yet  not 
a  cent  is  apparently  charged,  according  to  the  mech- 
anism furnished  by  the  companies,  above  the  legal  rate. 
If  a  laborer  out  of  a  job  is  charged  with  stealing  a  coat 
or  a  soup  joint,  the  same  consumer,  and  even  those  of 
the  same  class  as  the  accused,  are  ready  in  advance  to 
assume  his  guilt.  Yet  when  their  gas-  and  electric-light 
bills  are  inflated  to  an  extent  that  materially  diminishes 
the  profits  of  business,  or  even  necessitates  a  curtailment 

99 


BOSS  ISM    AND    MONOPOLY 

of  orders  on  the  baker  or  butcher,  they  must  submit  with 
the  best  possible  grace,  being  in  fear  that  if  they  kick 
up  a  row  with  so  powerful  an  institution  as  the  monopoly 
in  question,  even  more  serious  results  may  follow  than 
the  extortion  and  swindle  thus  practiced.  And  though 
the  perpetration  of  the  fraud  continues  from  month  to 
month  and  from  year  to  year,  the  consumer  strives  to 
divest  his  mind  of  the  disturbing  thought  that  men  so 
powerful  financially  and  so  respectable  socially  as  the 
monopolists  would  lend  themselves  to  an  outright  scheme 
of  grand  and  petty  larceny.  The  stealings  of  the  New 
York  Lighting  Trust  have  been  shown  up  from  time  to 
time  in  the  press  of  that  city. 

A  thorough  exposure  before  a  public  body  of  the 
San  Francisco  Electric  Light  and  Gas  Company  has 
occurred  in  but  one  instance,  and  is  of  sufficient  im- 
portance to  warrant  a  brief  account  of  it  here.  It  was 
conducted  before  the  Grand  Jury  in  April,  1905.  A 
general  practice  of  managing  the  meters  and  electric 
measuring  apparatus  so  as  to  give  false  registration 
was  exposed.  A  carefully  prepared  and  verified  report 
was  filed  by  an  expert  and  many  witnesses  were  exam- 
ined. That  the  fraudulent  imposition  was  not  occa- 
sional merely,  and  hence  attributable  to  the  dishonesty 
of  a  few  employees,  but,  on  the  contrary,  was  a  universal 
swindle,  concocted  and  put  in  general  operation  by  the 
management,  is  evident  from  the  great  number  and 
diversity  of  the  instances  shown,  as  well  as  from  the 
method  adopted,  which  was  such  as  could  only  be  oper- 
ated with  the  connivance  of  those  in  charge  of  the  gen- 
eral offices  of  the  company.  Among  the  most  important 
of  the  witnesses  was  Henry  T.  Sessions,  an  electrical 
engineer,  whose  business  was  the  inspection  and  testing 
of  meters  for  patrons  of  the  company  and  for  gas  and 
electricity  consumers  generally.  His  testimony  was  care- 
fully prepared  and  backed  up  with  data  covering  a  con- 

100 


'ABUSES   OF    PRIVILEGE    BY   MONOPOLIES 

siderable  period  of  time.  He  stated  that  he  had  tested 
hundreds  of  meters  throughout  the  city  and  had  already 
compelled  the  return  of  thousands  of  dollars  to  his  em- 
ployers on  his  showing  of  overcharges  made  by  scien- 
tific proofs  that  their  meters  were  registered  falsely. 
He  submitted  his  scientific  data  and  proofs  showing 
that  in  some  instances  the  meters  of  the  company  had 
been  made  to  run  as  high  as  105  per  cent  too  fast.  He 
also  submitted  positive  evidence  that  the  company  in- 
structed its  employees  to  "  fix  "  the  meters  so  that  they 
would  register  a  quantity  of;  -:lf;cjtr,icity  consumed  far  in 
excess  of  the  actual  amouiiu  ^ 

But  it  was  also  shQwn  that  false  meters -are  not  the 
only  device  for  swindling  consumer^.  I'iiG  ■  company 
was  shown  to  have  resorted  to  unique  and  skillfully 
worded  contracts  for  electric  lighting  which  consumers 
were  compelled  to  sign  before  the  company  would  agree 
to  supply  them  with  the  commodity  at  any  price.  These 
were  termed  "  minimum  contracts,"  which  bound  the 
consumer  to  pay  .$1.50  per  horse-power  for  the  current 
used,  with  a  stipulation  that  he  would  be  charged  "  at 
least  "  a  certain  sum.  In  this  way  the  city  ordinance 
was  flagrantly  violated  and  an  amount  as  high  as  five 
times  the  amount  fixed  by  law  often  collected.  The 
expert  proceeded  to  describe  how  by  an  ingenious  trick, 
worked  by  merely  turning  a  screw  in  a  manner  not  to 
be  detected  by  the  lay  mind  and  eye,  the  meter  was  made 
to  run  correctly  during  the  supposed  test.  This  being 
concluded,  the  machine  was  set  to  work  so  regulated  as 
to  register  falsely  in  the  office  of  the  company  before 
being  installed.  He  explained  that  the  operation  of  a 
meter  is  a  closed  book  to  the  average  mind,  and  that  it 
was  practically  impossible  for  the  consumer  to  detect 
the  deception,  so  cleverly  is  it  worked.  The  amount  of 
money  thus  obtained  by  this,  the  meanest  of  frauds  and 
false  pretenses,  in  that  one  city  can,  of  course,  never  be 

101 


BOSSISM    AND    MONOPOLY 

known.  The  practices  of  that  company  in  that  city,  it 
is  safe  to  assume,  are  no  worse  than  in  other  cities  where 
Standard  Oil  interests  dominate  in  ownership,  nor,  prob- 
ably, than  those  of  companies  in  other  cities.  The  peo- 
ple have  the  remedy  in  their  own  hands.  What  will 
they  do?  The  imposition  of  the  stamp  tax  by  King 
George,  for  which  the  colonists  went  to  war  with  Great 
Britain,  was  not  nearly  so  intolerable  nor  a  tenth  of  the 
magnitude  as  affecting  individuals  as  is  this  monopoly 
swindle.  After  having  more  than  a  "  square  deal  "  at 
the  handc -of.  consjimer.S' acting  through  their  super- 
visors, and"  being  accorded  a  high  rate,  it  inaugurates 
and  no  douJ)t;pe,rpetviates  a- scheme  of  petty  larceny  on 
a  grand  scale-  and  grand  larceny  on  a  petty  scale  which 
should  send  everyone  connected  with  it  to  State's  prison. 
If  public  officers  did  their  duty,  and  if  people  asserted 
themselves  along  proper  political  lines,  there  would  soon 
be  no  thieving  monopoly  in  San  Francisco  or  elsewhere 
to  transfer  their  earnings  by  wholesale  schemes  of  rob- 
bery and  extortion  to  private  coffers. 

That  the  hands  of  the  party  boss  and  monopoly  are 
joined  against  the  public  interest  in  New  York  is  evi- 
dent from  the  fact  that  the  lighting  monopoly  practices 
its  extortions  without  official  restraint,  although  the 
laws  have  provided  for  the  inspection  and  correction  of 
overcharges.  In  the  matter  of  electric  lighting  the  cus- 
tomers of  the  trust  are  utterly  unable  to  determine 
whether  or  not  they  are  actually  being  given  the  amount 
of  power  for  which  they  are  charged.  The  lack  of 
confidence  in  the  integrity  of  the  meters  is  widespread, 
but  from  their  records  there  is  absolutely  no  appeal. 
While  there  is  a  provision  in  the  charter  of  Greater  New 
York  for  the  inspection  of  electric  as  well  as  gas  meters, 
it  is  a  dead  letter.  No  appropriation  has  been  made  to 
meet  the  expense  of  employing  inspectors,  and  com- 
plaints to  the  departments  of  water,  gas,  and  electricity 

102 


ABUSES    OF    PRIVILEGE    BY    MONOPOLIES 

fall  on  deaf  ears.  The  official  who  would  properly  have 
charge  of  the  matter  under  the  charter  recently  stated 
in  a  published  interview  that  the  department  had  never 
been  able  to  get  an  appropriation  to  carry  out  that 
provision  of  the  charter,  although  it  is  mandatory  that 
such  inspections  be  made.  The  State  Gas-Meter  In- 
spector declared  that  he  had  no  jurisdiction,  that  the 
consumers  were  without  redress,  and  added :  "  It  is  a 
shame  that  it  should  be  so,  but  that  is  the  situation." 

During  the  investigation  by  a  legislative  committee 
in  New  York  City,  in  April,  1905,  Prof.  William  Hal- 
lock,  occupying  the  chair  of  physics  at  Columbia  Uni- 
versity, recognized  as  one  of  the  greatest  authorities, 
gave  sworn  testimony  on  tliis  very  point.  His  testimony 
was  alone  sufficient  to  have  convicted  the  gas  monopolists 
of  false  pretenses  and  violation  of  the  ordinances  as  to 
the  quality  of  gas.  He  showed  conclusively  that  con- 
sumers' gas  bills  were  increased  by  means  of  abnormal 
pressure  through  the  meters.  These  acts,  which  have 
been  often  charged,  have  been  proved.  The  professor 
had  thoroughly  tested  the  gas  many  times.  His  tests 
showed  that  the  gas  furnished  rarely  came  up  to  the 
twenty-candle-power  standard  required  by  the  city  ordi- 
nance, and  that  as  the  candle-power  was  diminished 
the  pressure  was  increased,  with  the  result  that  the  bills 
must  have  been  increased  from  fifty  to  one  hundred 
per  cent. 

V.   Workings  of  the  boss  and  monopoly  regime  in 
particular  cities 

Before  going  into  the  subject  of  the  exploitation  of 
the  people  of  New  York  by  the  community  of  Interests 
made  up  of  monopolists  and  party  bosses,  let  us  take  a 
glance  at  this  great  permanent  concourse  of  citizenship 
which  submits  to  so  arbitrary,  mercenary,  corrupt,  bold, 
8  103 


BOSS  ISM    AND    MONOPOLY 

and  infamous  a  combination.  Of  course  no  adequate 
description  of  this  peerless  metropolis  can  be  given ;  only 
a  few  aggregates.  A  few  of  its  residents — all  of  whom 
are  tax  dodgers — are  worth  from  $50,000,000  to  $500,- 
000,000,  and  from  three  to  four  thousand  are  worth 
over  $1,000,000.  Below  the  million  mark  are  several 
thousands,  also  mostly  tax  dodgers,  who  may  be  rated 
as  moderately  wealthy.  But  the  great  mass  of  the  peo- 
ple, those  who  do  most  of  the  voting  and  upon  whom  all 
public  burdens  bear  heavily  and  cannot  be  evaded,  are 
poor,  many  of  them  miserably  poor,  and  a  large  ma- 
jority of  these  are  the  complaisant  servants  of  partisan 
boss  rule.  The  wealthiest  of  the  millionaire  class  main- 
tain palaces  in  New  York  in  wliich  they  actually  reside, 
but  have  acquired  nominal  residences  in  Connecticut, 
Vermont,  New  Jersey,  and  "  up-State,"  in  order  to 
escape  taxation.  These  are  the  holders  of  the  public- 
service  systems.  So  it  is  seen  that  while  rich  streams  of 
revenue  from  the  earnings  of  wage-workers,  and  from 
the  profits  of  all  business,  constantly  flow  into  their 
coffers,  they  are  not  directly  affected  by  municipal  cor- 
ruption and  extravagance,  though  largely  responsible 
for  it;  nor  are  they  concerned  as  to  any  of  the  forms 
of  vice,  immorality,  and  crime,  accounts  of  which  in  the 
daily  press  afford  educational  matter  for  the  reading 
public,  incidentally  diverting  the  public  mind  from  the 
greater  crimes  of  the  plutocrats,  and  leaving  the  ordi- 
nary citizen  in  an  unfit  mental  and  moral  condition  to 
grapple  with  the  greater  reforms  so  much  needed,  such, 
for  instance,  as  municipal  ownership.  Many  of  the  other 
millionaires,  and  some  who  are  only  moderately  wealthy, 
evade  the  payment  of  taxes  by  committing  perjury. 

New  York  City,  before  Brooklyn,  Bronx,  and  Rich- 
mond were  consolidated  with  it  into  Greater  New  York, 
occupied  Manhattan  Island,  a  strip  practically  inclosed 
by  sea  water  and  inland  waters,  an  average  of  one  mile 

104 


ABUSES    OF    PRIVILEGE    BY    MONOPOLIES 

and  a  quarter  in  width  and  eight  and  one-half  miles 
long.  The  accessions  made  by  the  consolidation  need 
not  be  described.  Manhattan  contains  a  population  of 
about  two  millions  and  the  other  boroughs  an  aggregate 
of  about  one  and  a  half  millions — altogether  3,500,000 
actual  inhabitants.  Besides,  there  are  at  least  a  million 
whose  principal  business  or  work  is  in  New  York,  but 
who  reside  in  suburban  territory.  Many  of  these  have 
more  or  less  property  in  New  York. 

The  glories,  the  wonders,  the  riches,  and  magnifi- 
cence of  New  York  have  been  proclaimed  and  described 
with  tongue  and  pen  in  every  foreign  land  and  in  every 
nook  and  corner  of  the  American  continent,  and  herein 
the  truth  so  far  exceeds  report  that  it  can  never  be  fully 
known  without  actual  contact  and  personal  view. 

The  suburban  cities  zmiting  with  it  to  form  Greater 
New  York  are  themselves  great  cities.  So  that  whatever 
directly  concerns  the  municipal  control  and  management 
of  Greater  New  York  affects  and  should  concern  between 
six  and  one-half  and  seven  millions  of  people.  Now  the 
resident  of  the  United  States  remote  from  the  great 
metropolis,  who  has  not  studied  its  municipal  problems, 
nor  the  instrumentalities  nor  the  methods  pursued  by 
the  political  machines  in  control  of  its  affairs,  nor  the 
practices  and  charges  of  its  public-service  corporations 
at  close  range,  is  apt  to  come  to  New  York  to  study 
them,  with  several  innocent  delusions,  and  to  be  doomed 
to  several  disappointments.  He  has  reasoned  it  out, 
upon  probabilities,  that  a  citizenship  so  skilled  in  pri- 
vate finance  has  not  allowed  franchise  property  of  such 
enormous  value  as  the  right  to  occupy  its  streets  for 
railway,  lighting,  and  telephone  service,  to  go  into  pri- 
vate hands  at  all,  or,  if  at  all,  not  without  adequate 
and  substantial  returns  to  the  city.  He  takes  it  for 
granted  that  charges  for  gas  and  electric  light  and  for 
telephone  service  must  be  reasonable,  for  are  not  six  or 

105 


BOSSISM    AND    MONOPOLY 

seven  millions  of  intelligent,  virile  people  continuously 
using,  and  other  millions  annually  visiting  the  city  com- 
pelled to  occasionally  use,  them?  He  also  takes  it  for 
granted,  and  upon  the  same  line  of  reasoning,  that  the 
service  must  be  strictly  first  class ;  that  while  going 
from  one  point  to  another  in  the  considerable  territory 
occupied  with  the  business  and  residence  of  so  many 
people  one  may  for  a  nickel  not  only  be  exempt  from 
danger  of  all  forms  of  violence,  but  be  provided  with  a 
seat;  that  the  light  in  his  room  will  enable  him  to  read, 
and  that  the  advent  of  the  light  will  not  endanger  his 
life  because  of  noxious  and  deadly  odors  accompanying 
it,  and  that  telephone  service  is  prompt,  efficient,  and 
courteously  accorded  in  consideration  of  a  reasonable 
rate.  The  first  surprise  met  with  will  be  when  he  finds 
all  these  branches  of  public  service  in  private  hands. 
He  cannot  go  anywhere,  even  in  such  discomfort  as 
attends  street-car  service  in  New  York,  except  by  leave 
of,  and  upon  payment  of  tribute  to,  a  private  monopoly. 
If  he  rents  a  house  or  an  apartment,  he  must  submit  to 
the  most  outrageous  extortion  at  the  hands  of  another 
private  monopoly,  or  live  in  darkness.  Having  once 
permitted  the  company's  pipes  and  meters  to  be  installed, 
he  must  pay  not  merely  for  the  number  of  cubic  feet 
of  gas  that  he  consumes,  but  for  the  amount  that  the 
monopoly's  agents  think  he  ought  to  consume.  If  he 
closes  his  house  or  apartment  temporarily  and  goes  out 
of  the  city  for  a  week  or  for  several  months,  a  bill  is 
presented  upon  his  return  for  the  same  amount  per 
month  he  would  have  paid  had  he  not  absented  himself, 
and  payment  demanded  under  penalty  of  having  the 
supply  permanently  cut  off.  The  gas  supplied  him  is 
of  the  cheapest  possible  production  and  of  the  poorest 
quality.  As  it  exudes  from  the  pipe  there  is  also  emitted 
an  incombustible  substance  most  deleterious  to  the  health, 
affecting  the  lungs  and  eyes ;  the  light  produced  is  dim 

106 


ABUSES   OF    PRIVILEGE    BY   MONOPOLIES 

and  unsteady;  the  flame  is  not  white,  but  red.  It  is 
made  by  a  new  process,  water  and  certain  poisonous 
chemicals  being  the  principal  ingredients,  the  cost  of 
production  being  merely  nominal.  Experts  have  esti- 
mated that  its  manufacture  does  not  cost  more  than 
twenty-five  cents  per  thousand  feet.  The  rate  for  it, 
fixed  by  the  city  authorities,  is  one  dollar  per  thousand. 
But,  as  before  stated,  the  meter  supplied  by  the  gas 
company,  which  is  a  Standard  Oil  property,  is  a  swin- 
dling device,  a  mere  pretense  of  complying  with  the 
ordinance,  and  a  peg  upon  which  to  hang  false  pretenses 
in  the  shape  of  overcharges.  The  meters  are,  by  some 
secret  mechanism,  made  to  do  duty  all  the  time,  whether 
any  gas  is  used  in  a  house  or  not.  When  once  installed 
in  the  home  of  a  consumer,  he  must  continue  the  pay- 
ment of  gas  bills  at  the  dead  level  extortionate  rate, 
regardless  of  the  quantity  consumed.  If  he  should  in- 
crease consumption,  of  course  the  rate  is  measured  pro- 
portionately. If  he  refuses  to  pay  a  bill,  the  supply  is 
shut  off  and  he  is  blacklisted,  and  can  obtain  no  more 
gas  without  settling  all  unpaid  bills.  Thus  the  monop- 
oly in  what  may  be  called  the  very  center  of  civilization 
exercises  more  power,  and  exercises  it  mofe  mercilessly, 
than  any  pirate  crew  that  ever  exploited  the  commerce 
of  the  world.  Being  a  soulless  corporation,  it  cannot 
be  arrested  for  grand  or  petty  larceny,  and  as  it  has 
the  power — perhaps  the  documentary  evidence — with 
which  to  impeach  and  ruin  every  city  officer  who  does 
not  acquiesce  in  its  high-handed  career  of  crime,  the 
criminal  statutes,  "  in  such  case  made  and  provided  " 
against  extortions  and  swindlers,  are  dead  letters. 

The  Czar  of  Russia  impoverishes  his  subjects  by 
heavy  tax  burdens,  but  he  resorts  to  no  false  measures, 
and  the  taxes  are  used,  ostensibly,  at  least,  for  public 
purposes.  But  the  gas  monopoly,  allied  with  a  corrupt 
city  government,  placed  and  kept  in  power  by  a  corrupt 

107 


BOSS  ISM    AND    MONOPOLY 

organization,  thus  exercises  and  abuses  a  power  differ- 
ing in  no  material  respect  from  the  taxing  power,  ex- 
cept that  it  visits  upon  the  dehnquent  ratepayer  a 
penalty  more  severe  than  any  free  government  has 
power  to  visit  upon  a  delinquent  taxpayer.  And  the 
vast  sums  thus  extorted  go  into  the  coffers  of  John  D. 
Rockefeller  and  his  associates  of  the  Standard  Oil  syn- 
dicate, less  such  sums  as  may  go  to  party  leaders  under 
the  terms  of  the  treaty  existing  between  the  financial 
tyrants,  party  of  the  first  part,  and  the  political  blood- 
suckers, parties  of  the  second  part. 

The  practices  of  the  electric-lighting  monopoly  are 
equally  dishonest  and  more  difficult  of  detection.  Its 
agents  do  not  hesitate  to  enter  private  premises  without 
asking  leave;  they  string  their  wires  over  the  roofs  of 
houses,  attach  them  to  fences  and  other  fixtures  with  as 
much  impunity  as  if  they  owned  all  the  property  in  fee 
simple.  If  a  property  owner  or  a  lessee  should  cut  or 
detach  one  of  these  wires,  a  subservient  policeman,  hold- 
ing office  by  the  grace  of  a  political  boss,  would  arrest 
him,  and,  if  a  user  of  electric  light,  he  would  be  black- 
listed until  he  consented  to  a  replacement  of  the  wire. 

All  that  is  above  stated  with  reference  to  the  electric- 
lighting  monopoly  holds  true  as  to  the  telephone  monop- 
oly. Telephone  service,  in  fact  all  public  servace,  could 
be  furnished  more  cheaply  in  New  York  than  in  any 
city  on  the  continent.  The  charges  for  use  of  the  tele- 
phone between  points  on  Manhattan  Island  is  the  flat 
rate  of  ten  cents  per  call,  and  between  Manhattan  and 
the  other  boroughs  of  Greater  New  York,  and  between 
boroughs  generally,  is  twenty  cents  per  call.  The  rate 
is  just  double  the  rate  in  other  cities  and  the  service 
equally  unsatisfactory. 

The  enormity  of  the  crimes  committed  by  municipal 
bodies  against  the  aggregate  citizenship  is  sometimes  so 
great  that  it  is  impossible  to  fully  portray  it  because 

108 


ABUSES   OF    PRIVILEGE    BY   MONOPOLIES 

of  the  absence  of  a  standard  of  comparison  of  sufficient 
magnitude.  The  New  York  Rapid  Transit  Commis- 
sion, which  was  given  control  of  the  first  great  Subway 
scheme,  were  men  of  high  rating  in  the  world  of  trade 
and  finance.  Having  almost  unlimited  authority  and 
control  of  the  city's  credit  to  the  amount  of  hundreds 
of  millions,  if  so  much  should  be  needed,  what  an  oppor- 
tunity was  here  afforded  for  service  to  the  people,  which 
they  might  begin  to  enjoy  within  two  or  three  years 
and  continue  to  enjoy  to  the  remotest  period  of  time. 
What  did  the  Rapid  Transit  Commission  do.^*  They 
actually  issued  the  city's  bonds,  bearing  3^  per  cent 
interest,  a  rate  which  insured  their  sale  above  par  in 
the  open  market  for  enough  to  construct  the  Subway, 
sold  them  at  par,  and  then  gave  therefor  to  the  Belmont- 
Rothschild  syndicate,  which  took  the  bonds  at  par,  the 
use,  free,  of  the  Subway  for  fifty  years.  This  was  done 
because,  forsooth,  the  highly  respectable,  mossback, 
ultra-conservative  commission  held  in  disfavor  anything 
that  might  have  even  the  appearance  of,  or  might  in- 
directly give  countenance  to,  the  theories  of  socialism. 
And  so  they  gratified  their  little,  nan*ow,  class  preju- 
dices, saying  neither  yea  nor  nay  to  the  people,  at  the 
people's  expense,  to  the  known  extent  of  $50,000,000 
and  to  an  incalculable  extent  in  addition. 

The  Belmont  syndicate  operating  the  Subway  are 
exempt  from  taxation  on  the  property  used  in  its  opera- 
tion during  the  fifty  years,  at  least,  in  which  they  are 
to  use  it.  They  are  guaranteed  against  any  reduction 
from  a  five-cent  fare,  no  matter  how  much  the  traffic 
may  grow  and  profits  increase.  The  city  also  assumed 
the  payment  of  all  damages  to  abutting  property  own- 
ers— a  considerable  sum.  The  Subway  people  pay  about 
S^  per  cent  interest  on  the  money  furnished  by  the  city 
to  build  the  Subway,  and  pay  one  per  cent  per  annum 
into  a  sinking  fund.     The  city  must  purchase,  at  a  fair 

109 


BOSSISM    AND    MONOPOLY 

valuation,  rolling  stock  and  other  equipment  at  the  end  of 
the  contract  term.  There  is  a  question  whether  the  con- 
tract terminates  at  the  end  of  fifty  or  continues  seventy- 
five  years.  If  the  thief  who  taps  a  till  deserves  the  pun- 
ishment he  receives,  what  ought  to  be  done  to  the  Rapid 
Transit  Commissioners?  In  less  than  six  months  after 
the  opening  for  business  of  the  Subway  all  New  York  was 
in  a  veritable  frenzy  of  excitement  about  a  few  gambling 
dens  and  irregularly  kept  lodging  houses,  and  various 
members  of  the  police  were  being  made  to  "  walk  the 
plank  "  for  remissness  of  duty  or  because  suspected  of 
petty  grafting;  but  the  great  crime  of  the  Subway  had 
almost  faded  from  the  popular  mind.  About  the  same 
time  the  raising  of  rates  to  the  amount  of  a  few  cents 
per  trip  by  the  Long  Island  Railroad  Company  resulted 
in  mass  meetings,  protests  a  yard  long  by  the  patrons 
of  the  road,  and  hundreds  of  columns  of  the  screechiest 
kind  of  yellow  journalism  in  the  winter  months  of 
1904—5;  but  not  a  meeting  was  held,  not  a  resolution 
presented,  scarcely  a  line  of  criticism  relative  to  the 
biggest  steal  ever  known  in  the  whole  history  of  mu- 
nicipal misgovernment.  Should  one  be  condemned  as 
an  agitator  if  he  suggested  to  the  people  that  they 
wake  up? 

That  private  monopolies  of  public  service  are  re- 
sponsible for  most  of  the  corruption  seen  in  municipal 
government  is  clearly  demonstrated  in  Philadelphia. 
The  people  there  have  been  robbed  of  many  millions  in 
exchange  for  bribe  money  paid  to  a  corrupt  and  tyran- 
nical political  machine  which  has  for  many  3'ears  com- 
pletely disfranchised  the  rightful  electorate  and  fabri- 
cated majorities  for  its  nominees.  The  street-railway 
franchises  were  corruptly  disposed  of  to  private  corpo- 
rations years  ago.  The  city  was  once  the  owner  of  a 
lighting  plant,  but  seven  years  ago  it  was  robbed  of 
that.     The  corporations  purchased  the  requisite  votes  in 

110 


ABUSES   OF    PRIVILEGE   BY   MONOPOLIES 

the  municipal  council  and  procured  a  thirty  years'  lease 
of  it,  in  spite  of  public  protests.  By  the  terms  of  the 
lease  the  city  received  a  percentage  of  the  returns  on 
the  consumption  of  gas.  Recently  this  percentage  be- 
came a  larger  annual  aggregate  than  the  lessees  had 
expected,  and  they  determined  to  have  it  abrogated,  and 
to  have  for  private  enjoyment  a  richer  gas  loot,  re- 
gardless of  public  right.  When  what  was  proposed 
became  generally  known  there  was  a  storm  of  popular 
protest,  which  was  coolly  ignored.  The  terms  of  the 
lease  provided  that  the  city  might  terminate  the  lease 
at  the  end  of  ten  years.  The  citizens  demanded  of  their 
municipal  Legislature  that  this  option  be  exercised.  In- 
stead of  heeding  that  demand,  a  proposition  of  the 
corporation  to  pay  $25,000,000  for  a  seventy-five-year 
extension  of  the  lease  was  jammed  through  the  coun- 
cil, while  the  police  force  of  the  city  freely  used  their 
clubs  upon  the  citizens  who  were  present  making  noisy 
objections. 

But  what  honest  public  sentiment  can  do  when  fully 
aroused  has  been  recently  demonstrated  in  Philadelphia. 
The  scheme  of  the  corrupt  political  ring  has  been  en- 
tirely defeated  by  a  resolute  mayor,  backed  up  by  a 
popular  uprising. 

Blind  and  fanatical  partisanship  on  the  part  of  the 
people  of  Philadelphia  in  fonner  days  is  responsible  for 
their  recent  helplessness  in  the  hands  of  bosses  and 
private  monopolies.  As  they  permitted  these  twin 
tyrants  to  ascend  to  seats  of  power  and  gave  them  the 
opportunities  which  they  have  so  ruthlessly  used,  one's 
first  impulse  is  to  withhold  commiseration.  But,  as  the 
matter  stands,  Philadelphia  is  something  more  than  a 
bad  example :  it  is  a  warning.  StefFens,  in  "  The  Shame 
of  the  Cities,"  shows  that  corruption  there  has  run  its 
full  course  and  gone  down  to  the  roots  of  representa- 
tive government,  that  the  law-abiding  people  of  that 

111 


BOSS  ISM    AND    MONOPOLY 

city  have  been  actually  disfranchised,  and  that  elections 
are  carried  by  stuffed  rolls  and  dummy  votes.  This  is 
not  merely  the  last  stage  before  the  end:  it  is  the  end. 
No  wonder  the  clergy  there  are  summoning  their  flocks 
to  prayers  for  civic  salvation.  Woe  to  the  Republic 
when  the  Philadelphia  situation  shall  be  duplicated  in 
other  cities.  It  is  a  matter  which  deeply  concerns 
Americans  everywhere.  It  is  a  leprosy  which  must  be 
stamped  out  before  it  spreads.  If  the  party  bosses  and 
monopolies  shall  once  succeed  in  wholesale  disfranchise- 
ment of  the  electorate  of  the  cities  and  States  the  word 
"  Failure  "  may  be  inscribed  upon  the  record  of  demo- 
cratic government.  Our  transformation  to  corrupt 
despotism  will  then  be  complete. 

There  was  a  time  when  business  and  employment  in 
the  city  of  Chicago  could  seldom  be  obtained  without 
the  consent  of  monopoly  agents  in  and  out  of  public 
office.  The  public-service  corporations  shirked  taxation 
by  open  and  wanton  bribery  of  boards  of  taxation  and 
equalization,  and  large  individual  taxpayers  evaded 
their  share  of  public  burdens  by  bribery  added  to  per- 
jury. The  practice  grew  into  an  established  habit,  and 
a  false  affidavit  was  made  before  a  deputy  assessor  with 
as  little  compunction  as  an}'^  conventional  lie  could  be 
uttered.  To  be  elected  to  the  office  of  assessor  was  the 
ambition  of  all  "  thrifty  "  politicians  because  it  meant 
retirement  from  office  with  a  fortune,  and  a  deputyship 
in  that  office  was  even  better  than  being  an  alderman. 
But  the  darkest  hour  precedes  the  dawn,  and  did  in  the 
case  of  Chicago.  The  political  and  economic  philosopher, 
in  judging  between  the  comparative  capacities  for  self- 
government  of  the  people  of  various  large  cities  of  the 
United  States,  must  give  the  highest  tribute  to  Chicago. 
The  people  there  have  recently  shown  that  they  have  not 
by  any  means  been  subjugated  by  King  Monopoly  and 
tlic  high  priests  of  corruption  known  as  party  bosses. 

112 


ABUSES    OF    PRIVILEGE    BY    MONOPOLIES 

They  recently,  on  the  first  Tuesday  in  April,  1905, 
elected  a  municipal  ticket  headed  by  Hon.  Edward  F. 
Dunne  for  Mayor,  on  a  platform  setting  forth  a  com- 
plete plan  of  procedure  to  acquire  and  put  in  force  im- 
mediately municipal  ownership  of  all  street-car  lines. 
The  people  there  have  defied  their  libelers,  the  editorial 
writers,  who  so  often  have  accused  them  of  incapacity 
for  self-government  in  matters  of  most  vital  importance 
to  their  welfare.  They  have  likewise  spurned  the  jibes 
and  threats  of  political  rings  that  have  feasted  and  fat- 
tened so  long  upon  the  fat  bribes  of  municipal  fran- 
chise carcasses.  They  have  refused  to  be  dismayed  and 
fooled  by  the  "  high-class  and  conservative  "  class,  who 
have  heretofore  managed  to  hold  majorities  for  the  old 
corrupting  system  of  private  ownership  by  substituting 
for  arguments  denunciations  of  public-ownership  prop- 
ositions as  "  dangerous  delusions  "  and  "  socialistic 
vagaries."  They  have  set  an  example  which  will  surely 
be  followed  in  other  cities,  and  within  a  few  years  the 
cities  of  New  York,  Boston,  Philadelphia,  St.  Louis, 
New  Orleans,  San  Francisco,  and  others  will  be  operat- 
ing successfully  not  only  their  own  water  and  lighting 
plants  but  their  means  of  urban  and  interurban  trans- 
portation. By  the  victory  in  Chicago  the  first  strong- 
hold of  the  wealth-buttressed  and  prejudice-incrusted 
enemy  is  taken  and  others  are  being  rapidly  under- 
mined. The  veterans  in  the  once  weak  and  scattered 
but  now  strong  and  concentrated  army  enlisted  for 
progress  and  true  democracy  may  now  rejoice,  for  one 
great  battle  is  won  and  the  ranks  of  the  enemy  are 
being  tliinned  in  all  directions,  the  deserters  coming 
over  in  squads,  companies,  and  regiments.  The  great 
conquering  hosts  of  freedom  will  now  take  up  the  task 
of  removing  the  yoke  of  interstate  transportation  worn 
so  long  and  which  has  become  so  heavy  that  it  can  be 
no  longer  borne.     Education  on  the  subject  of  public 

113 


BOSSISM   AND    MONOPOLY 

utilities  has  been  so  general  and  thorough  that  little 
more  is  needed  than  to  organize  and  agree  upon  the 
lines  of  procedure. 

VI.  Gigantic    absorption   contemplated    hy    the   North 
American  Company 

One  of  the  despotisms  of  which  we  speak  rises  su- 
perior to  interstate  commerce.  It  is  the  North  American 
Company,  formed  to  absorb  the  local  monopolies  of  every 
State  and  city  and  directly  control  the  operation  and 
management  of  street  railroads.  It  carries  trustification 
a  step  beyond  anything  generally  known  among  the 
people.  Having  legal  sanction  in  the  laws  of  New  Jer- 
sey, and  not  having  to  do  with  interstate  traffic,  it  is 
beyond  the  reach  of  any  statutes  that  Congress  or  the 
Legislature  of  any  State  can  constitutionally  enact. 
It  does  no  mining,  manufacturing,  farming;  does  no 
mercantile  business.  It  has  founded  a  new  department 
of  human  endeavor,  namely,  interstate  finance.  Among 
its  other  powers  is  "  the  power  of  interstate  finance  and 
management  without  the  legal  restrictions  of  interstate 
transportation  and  commerce."  Such  a  company  un- 
doubtedly has  the  power,  by  the  mere  chicanery  of 
finance,  to  unite  any  number  of  public-service  corpora- 
tions engaged  in  the  same  or  different  lines  of  business 
under  its  control,  and  thus  evade  statutes  and  charter 
provisions  forbidding  the  consolidation  of  corporations. 

There  is  no  doubt  that  the  Standard  Syndicate  which 
already  controls  New  York's  gas-  and  electric-lighting 
industries,  and  has  its  wire  conduits  in  the  streets,  can, 
when  it  gets  ready,  acquire  and  bring  under  the  same 
managing  control  the  Metropolitan,  Interborough  (Sub- 
way), and  Brooklyn  Rapid  Transit  interests.  There 
is  little  room  for  doubting  the  controlling  interest  of 
Standard  Oil  in  the  North  American  Company,  which 

114 


ABUSES    OF    PRIVILEGE    BY   MONOPOLIES 

has  accomplished  much  in  the  way  of  absorption  al- 
ready. With  a  capitalization  of  $22,000,000,  which 
may  be  expanded  without  limit,  it  has  obtained  control 
of.  enormously  valuable  street-car  franchises  in  four 
cities  of  an  aggregate  capitalization  of  $138,558,350. 
It  is  patterned  closely  after  the  Northern  Securities 
Company,  but  avoids  the  shoal  upon  which  the  latter 
was  wrecked  by  the  charter  restriction  above  quoted. 
The  cities  invaded  by  it  thus  far  are  St.  Louis,  Mil- 
waukee, Detroit,  and  Cincinnati.  In  St.  Louis,  for  in- 
stance, it  has  now  acquired  all  the  gas,  electric  light 
and  power,  and  nearly  all  the  street-transportation  in- 
terests. Here  is  seen  a  system  of  monopolies  within  a 
superior  monopoly,  the  creations  of  a  foreign  potentate, 
as  it  were,  having  no  local  responsibility  or  interest,  the 
local  owners  disappearing  as  such,  and  reappearing  as 
mere  agencies  for  a  higher  power.  The  capitalization 
of  the  dominant  company  is  comparatively  small,  but  it 
is  sufficient  for  the  present  purpose,  which  is  the  holding 
of  stocks  in  trust  for  the  subordinate  monopolies  and  the 
operation  of  them  as  one  from  a  central  source. 

Undoubtedly  one  purpose,  carefully  kept  concealed, 
is  the  political  control  of  elections  and  local  government, 
the  unification  of  interests  thus  secured  vastly  aug- 
menting the  political  and  manipulating  powers  of  the 
monopolies.  The  plan  also  twice  removes  personal  re- 
sponsibility of  the  parties  really  interested  for  any  mis- 
deeds and  crimes  committed  in  maintaining  monopoly 
prices  and  privileges.  What  a  vast  concentration  of 
financial  power  and  wealth  is  here  shown !  Four  large 
cities  already  subjugated  and  the  future  acquisition 
and  activities  of  the  trust  unlimited!  All  the  people 
of  these  and  of  the  cities  to  be  hereafter  invaded  to 
pay  tribute  to  a  corporation  formed  under  a  foreign 
power,  In  no  way  subject  to  visitation  by  their  own  State 
courts.     There  is  just  one  avenue  of  escape  from  such 

115 


BOSSISM    AND    MONOPOLY 

a  condition,  and  that  is  municipal  ownership.  Why  are 
there  such  laboriously  contrived  schemes,  such  over- 
reaching, such  pledging  of  credit  beyond  ability  to  pay, 
and  such  capitalization  beyond  values?  Why  the  doing 
of  so  many  things  that  men  could  not  be  induced  to  do 
for  the  attainment  of  any  other  mere  business  end, 
where  the  thing  aimed  at  is  control  of  public-service 
monopoly?  Simply  because  such  enterprises  are,  so 
long  as  private  ownership  is  tolerated,  perpetual,  auto- 
matically acting,  profit-paying  enterprises ;  because  the 
courts  long  ago  in  the  interest  of  monopoly  established 
a  rule  which  made  governments,  that  is  to  say,  the 
people,  the  primary  underwriters  of  all  such  monopolies, 
bound  to  pay  such  rates  and  tolls  as  would  yield  them 
a  profit,  no  matter  if  every  person  engaged  in  other 
lines  of  business  were  forced  into  bankruptcy  under  the 
stress  of  competition ;  and  because  the  courts  have  recog- 
nized the  application  of  certain  presumptions,  rules  of 
evidence,  and  methods  of  calculation  in  fixing  valuations 
of  monopoly-owned  properties  which  justify  rates  and 
charges  that  yield  profits  much  greater  than  can  be 
realized  on  the  same  amount  invested  in  other  lines  of 
business.  There  is  just  one  place  where  these  judicial 
opinions  can  be  reversed  and  justice  attained,  and  that 
is  at  the  ballot  box  on  propositions  for  public  ownership. 


116 


CHAPTER    VI 

ADVANTAGES      OF      MUNICIPAL      OWNERSHIP OBJECTIONS 

CONSIDERED 

In  one  way  or  another  enougli  franchises,  street 
privileges  and  easements,  exclusive  rights  secured  by 
public  law,  contracts,  and  other  property  have  been 
transferred,  without  consideration  to  the  people,  from 
the  common  stock  of  the  public  in  the  United  States,  to 
have  constructed  and  equipped  all  our  large  lines  of 
steam  railway,  all  the  street  railway  and  gas  and  electric 
plants  in  the  country.  It  is  the  right  and  duty  of  the 
people  to  take  for  public  use,  at  what  reasonable  price 
men  consider  a  fair  valuation  under  all  circumstances, 
the  public  property  now  in  the  hands  of  the  corruption- 
ists,  and  inaugurate  government  use  and  ownership. 
The  people  will  at  the  same  time  save  themselves  from 
incalculable  loss,  and  in  a  measure  arrest  the  decay 
which  has  permeated  society  from  top  to  bottom  and 
from  center  to  circumference. 

It  is  indeed  difficult  to  understand  the  attitude  of  the 
average  citizen  toward  what  may  be  designated  as  whole- 
sale extortion  in  view  of  his  intolerance  of  lesser  im- 
position. If,  for  instance,  a  policeman  should  order 
the  removal  of  some  harmless  and  inoJfFensive  incum- 
brance from  a  sidewalk  in  front  of  his  store,  he  would 
loudly  protest  and  rave  against  the  police  department. 
If  some  clerk  in  a  municipal  office  should  embezzle  a  few 
dollars,  thereby  injuring  him  as  a  taxpayer  to  the  ex- 
tent of  one-hundredth  of  a  cent,  he  would  very  properly 

117 


BOSSISM    AND    MONOPOLY 

insist  upon  the  discharge  and  prosecution  of  the  un- 
faithful servant.  But  in  the  same  town  is  a  water 
company  which  charges  him  two  prices  for  water, 
amounting  to  an  extortion  of  several  dollars  each 
month;  a  gas  company  whose  fixed  prices  are  exorbi- 
tant, and  not  only  so,  but  which  by  fraudulent  meters 
duplicates  the  exorbitant  prices,  to  his  loss  of  many  dol- 
lars annually;  a  street-railway  company,  earning  divi- 
dends equal  to  a  high  rate  of  interest  on  many  millions 
of  dollars  never  invested,  and  which  also  enjoys  exclusive 
occupancy  of  all  the  principal  streets.  To  the  revenues 
of  such  a  company  our  average  citizen  contributes  in 
the  form  of  five-cent  fares,  which  might  be  less  and  still 
produce  a  large  profit  on  actual  investment.  Then 
there  is  a  telephone  company  whose  service  is  wretched 
and  whose  charges  are  also  exorbitant.  He  submits, 
with  a  bad  grace,  it  is  true,  but  still  he  submits,  to  all 
these  oppressions,  which  drain  his  resources,  and  leave 
him  but  a  narrow  margin  of  profit  to  be  divided  be- 
tween himself  and  the  "  duly  elected  and  qualified " 
tax  collector. 

The  recent  Chicago  election  shows  what  may  be 
done  when  the  people  are  thoroughly  aroused  to  their 
own  interests.  It  has  not  only  gone  far  to  settle  the 
fate  of  private  ownership  of  such  utilities  as  water, 
gas,  electricity,  and  street  railroads  in  municipalities, 
but  has  set  many  minds  to  asking  themselves  or  their 
neighbors  the  question,  "  Why  should  not  our  na- 
tional Government  own  and  operate  railroads  and  tele- 
graph lines.''  "  Chicago  has,  as  a  result  of  its  recent 
election,  established  a  reputation  for  progressiveness  all 
over  the  United  States,  and  Dunne's  election  on  a  posi- 
tive unequivocal  platform  for  municipal  ownership  of 
street  railways  will  cause  a  general  movement  in  that 
direction  in  all  the  other  cities  where  boss  rule  has  not 
so  firmly   fastened   its  tentacles  upon  the  body   politic 

118 


ADVANTAGES  OF   MUNICIPAL   OWNERSHIP 

as  to  render  progress  impossible.  But  even  the  worst 
boss-ridden  community  will  not  lose  hope,  and  of  this 
Chicago  is  itself  a  valuable  lesson ;  indeed,  the  whole 
issue  rests  with  the  people  everywhere  in  the  cities  and 
in  the  whole  country.  Let  us  hope  that  the  declaration 
so  often  made  that  "  in  the  long  run  the  people  always 
do  the  right  tiling,"  is  not  a  delusion.  Dr.  Samuel 
Johnson  said,  "  Patriotism  is  the  last  resort  of  scoun- 
drels." He  would  have  come  nearer  the  truth  if  he  had 
said  that  it  is  their  first  resort.  With  what  a  wonder- 
ful showing  of  loving-kindness,  fairness,  and  disinter- 
estedness do  some  of  our  editorial  writers  and  contribu- 
tors review  and  comment,  marshal  facts  and  arguments, 
and  strike  a  balance  always  on  the  side  of  monopolistic, 
corrupt,  private  ownership.  How  often  have  we  seen 
the  formidable  political  boss  and  his  companies,  regi- 
ments, and  armies  of  office-seekers,  ward  bums,  and 
heelers,  all  at  once  become  prophets  of  evil  and  sticklers 
for  economy  and  purity  in  the  administration  of  mu- 
nicipal government!  But  the  people  are  learning  to 
study  motives  and  the  interests  and  environments  of 
individuals.  Let  them  beware  of  the  Greeks  bearing 
gifts. 

The  proper  attitude  for  the  people  of  each  city  to 
assume  with  reference  to  the  principal  public  utilities 
is  ably  expressed  by  Dr.  John  H.  Girdner  in  a  recent 
article  in  Tom  Watson's  Magazine,  entitled  "  Franchise, 
Wealth,  and  Municipal  Ownership,"  having  reference 
to  New  York,  and  it  is  largely  applicable  everywhere, 
in  which  he  says :  "  Talk  about  municipal  ownership ! 
Why  the  municipality,  which  is  another  name  for  the 
people,  already  own  everything  they  need.  They  own 
the  streets  and  the  right  of  way  through  them,  and 
they  own  the  money  to  build  lighting  plants,  railways, 
and  telephone  lines.  The  only  thing  they  do  not  own 
is  permission  to  use  their  own  property.  And  this  is 
9  119 


BOSS  ISM    AND    MONOPOLY 

withheld  from  them  by  greedy  trust  magnates  through 
their  bought-up  politicians.  We  need  men  in  this  city 
who  cannot  be  deceived  by  the  names  democracy  and 
republicanism.  We  need  men  who  will  stand  together 
and  protect  our  franchise  property  against  grafting 
politicians  and  grafting  political  organizations,  no 
matter  by  what  names  they  call  themselves.  New 
York  City  may  be  likened  to  a  big  '  skyscraper '  laid 
on  its  side.  The  streets  correspond  to  the  elevator 
shafts.  Now,  what  would  be  thought  of  the  sanity  of 
a  company  of  men  who  built  a  high  office  building, 
hotel,  or  apartment  house  and  allowed  their  agents  to 
give  away  to  outsiders  the  right  to  run  the  elevators 
and  the  further  right  to  prey  upon  the  tenants  who  are 
obliged  to  use  them.?  Yet  this  is  exactly  what  the  poli- 
ticians have  done  and  are  doing  with  the  streets  of  this 
city.  Make  an  inventory  of  the  Gas  Trust's  property, 
find  out  how  much  it  would  cost  to  duplicate  its  plant, 
then  subtract  that  sum  from  the  capitalization  of  the 
trust,  and  the  remainder  is  franchise  property,  and 
that  belongs  to  the  people.  Go  through  the  list  of 
telephone,  telegraph,  and  railway  companies  the  same 
way  and  you  will  begin  to  get  an  idea  of  the  value 
and  earning  capacity  of  your  franchise  property,  which 
has  been  stolen  from  you  by  your  agents  the  office- 
holders." 

The  true  relation  of  the  individual  owner  upon 
whose  property  is  superimposed  the  use  and  occupancy 
of  a  street  railway,  or  gas  mains  and  pipes,  is  little 
understood,  hence  the  vague  and  confused  notions  con- 
cerning the  nature  and  value  of  the  concessions  or 
franchises  that  have  been  given  to  them.  This  is 
cleared  up,  and  such  true  relation  very  aptly  shown  by 
the  writer  just  mentioned  and  in  the  same  article,  as 
follows :  "  When  you  buy  a  house  and  lot  in  a  town 
or  city  your  property  is  of  two  kinds,  private  property 

120 


ADVANTAGES   OF   MUNICIPAL   OWNERSHIP 

and  franchise  property.  Your  private  property  begins 
at  the  building  Hne  in  front  and  extends  backward  the 
full  width  of  your  lot  to  the  fence  or  line  which  divides 
your  back  yard  from  the  back  yard  of  your  neighbor 
who  fronts  on  the  next  street.  Your  franchise  property 
extends  from  the  building  or  stoop  line,  outward,  the 
full  wndth  of  your  lot,  across  the  sidewalk,  and  on  to 
the  middle  of  the  street,  where  it  meets  the  franchise 
property  of  your  neighbor  on  the  opposite  side  of  your 
street.  The  money  to  grade,  drain,  and  pave  the 
street  in  front  of  your  lot  was  raised  by  assessments 
levied  on  that  lot.  These  assessments  were  added  by 
previous  owners,  perhaps,  to  the  cost  of  the  lot  and 
were  a  part  of  the  price  you  paid  for  the  lot.  In  other 
words,  you  bought  and  paid  for  the  franchise  property 
in  front  of  your  stoop  line  as  directly  as  you  did  for 
the  private  property  behind  the  stoop  line,  and  you  are 
therefore  entitled  to  the  usufruct  of  the  one  as  much  as 
the  other.  The  aggregate  of  the  franchise  wealth  of  all 
the  individual  owners  in  any  given  street  is  the  sum 
total  of  the  franchise  wealth  of  that  street.  And  the 
aggregate  of  the  franchise  wealth  of  all  the  streets  of 
a  given  town  or  city  is  the  sum  total  of  the  franchise 
wealth  of  that  city.  And  it  is  absolutely  owned  by  all 
the  inhabitants  of  that  city,  for  everyone  contributes 
in  some  manner  to  the  creation  and  maintenance  of  this 
franchise  wealth.  There  is  another  thing  about  this 
kind  of  property  which  the  people  ought  to  keep  in 
mind.  Like  their  private  property,  their  rights  in  this 
franchise  property  extend  from  the  surface  right  down 
into  the  earth,  as  far  as  it  is  practical  to  dig;  and  from 
the  surface  right  up  into  the  sky,  as  high  as  it  is 
practical  to  build.  It  is  well,  I  say,  to  keep  these  facts 
in  mind;  they  may  come  in  handy  when  a  corrupt 
mayor  and  board  of  aldermen,  or  an  eminently  respect- 
able board  of  rapid  transit  commissioners,  are  about  to 

121 


BOSSISM    AND    MONOPOLY 

hand  over  to  a  private  corporation  a  city  subway  or 
elevated  road." 

The  fear  so  often  expressed  by  the  overcautious 
that  government  ownership  is  an  experiment  fraught 
with  danger  would  not  exist  if  they  would  inform  them- 
selves of  what  has  been  done  and  is  being  done  in 
cities  where  it  has  been  tried.  A  frequent  basis  of  op- 
position is  the  fear  that  a  new  source  of,  and  induce- 
ment to  official  corruption  will  be  thus  offered.  Ob- 
jectors on  that  ground  should  reflect  that  the  greatest 
source  of  corruption  in  municipal  government  arises 
from  the  secret  sale  of  public  franchises  and  the  in- 
terests of  public-service  corporations  in  the  fixing  of 
rates  so  high  as  to  yield  large  dividends  on  watered 
stock;  and  in  the  Federal  Government  it  is  the  vast 
railway  interests  always  seeking  to  prevent  interfer- 
ence with  their  abuses  of  special  privilege.  So  long 
as  these  interests  remain  in  private  hands,  so  long  will 
these  incentives  to  bribery  exist,  so  long  will  men  de- 
siring to  be  bribed  seek  and  obtain  election  to  office. 
When  these  powerful  interests  are  eliminated  from  poli- 
tics, the  occupation  of  the  party  boss  will  be  practically 
gone,  and  it  will  be  easier  for  honest,  self-respecting  men 
to   obtain  political  preferment. 

There  will  be  much  to  be  done  by  public  officers 
and  greater  responsibilities.  The  citizen  will  have  more 
at  stake ;  there  will  be  a  wider  field  for  political  action, 
and  he  will  give  liis  preference  at  the  ballot  box,  not 
to  all-around  good  fellows,  but  to  the  candidate  hav- 
ing the  best  talent  for  managing  important  business 
affairs. 

The  experience  of  other  cities  and  countries  that 
have  had  any  with  national  ownership  and  operation 
of  railways  and  locally  of  municipal  utilities  goes  far 
to  answer  objectors.  However  much  the  opposition 
may  pervert  the  facts  and  falsify  the  statistics,  when 

122 


ADVANTAGES  OF   MUNICIPAL   OWNERSHIP 

the  experiences  of  such  cities  and  countries  are  fully 
investigated  it  is  found  that  success  has  almost  in- 
variably followed  the  experiment.  So  far  as  known 
there  has  never  been  an  outright  failure.  Where  in  a 
few  instances  a  pecuniary  loss  has  resulted  to  the  pub- 
lic, it  is  shown  that  the  utility  was  not  of  a  character 
or  of  such  general  demand  as  to  have  made  it  profitable 
either  in  private  or  in  public  hands. 

Glasgow  always  owned  its  street-railway  lines.  In 
1871  the  city  leased  them  to  a  private  corporation  for 
a  term  of  twenty-three  years  on  terms  very  advanta- 
geous to  the  city.  That  was  the  only  lease  ever  made, 
and  from  it  the  city  derived  a  profit  equivalent  to 
$318,140.  In  1894,  the  lease  having  expired,  the  city 
refused  to  renew  it,  and  began  to  operate  the  lines  as 
a  municipal  enterprise,  at  once  introducing  important 
improvements,  and  has  continued  to  own  and  operate 
the  system  to  the  present  time.  The  fares  range  from 
one  cent  to  eight  cents,  according  to  distance  traveled, 
the  average  being  less  than  two  cents.  In  round  num- 
bers, according  to  the  last  annual  report,  56,000,000 
passengers  were  carried  during  the  preceding  year  for 
one  cent,  178,000,000  for  two  cents,  9,000,000  for 
three  cents,  and  3,000,000  for  the  longer  distances. 
Glasgow,  in  addition  to  owning  and  operating  its  street 
railways,  also  manufactures  its  cars,  motors,  and,  for 
the  most  part,  all  other  devices  which  constitute  a  trac- 
tion plant.  Under  municipal  ownership  the  fares  have 
been  reduced  more  than  forty  per  cent,  wages  have 
nearly  doubled,  the  service  has  been  greatly  improved, 
until  it  is  the  model  plant  of  the  world.  Despite  low 
fares  and  large  expenditures  to  perfect  the  system,  the 
surplus  of  receipts  is  $1,125,000  per  annum.  What 
has  been  done  by  Glasgow  can  be,  and  has  been  done 
elsewhere.  If  the  people  of  other  American  cities  can- 
not take  a  lesson  from  Chicago,  they  should  at  least 

123 


BOSS  ISM    AND    MONOPOLY 

profit  from  a  study  of  the  Glasgow,  Manchester,  and 
Liverpool  successes. 

Reports  could  be  quoted  from  many  European  cities 
showing  almost  without  an  exception  satisfactory  ser- 
vice, low  rates,  and  profits  to  the  respective  municipali- 
ties. The  report  made  by  United  States  Consul  W.  C. 
Hamm,  of  Hull,  England,  is  given  here  in  part,  not 
because  of  its  exceptional  showing  in  favor  of  public 
ownership,  but  because  of  its  fullness.  He  says :  "  In 
the  gas  department  the  profit  for  the  year  was  $15,380, 
from  which  there  is  to  be  deducted  interest  on  the  debit 
balance  and  a  sum  for  the  sinking  fund,  leaving  a  net 
credit  balance  on  the  revenue  account  of  $12,652.  The 
working  profit  of  the  waterworks  was  $149,893,  de- 
ducting city  fund  annuity ;  $57,449,  interest  on  loans, 
and  $8,622  for  the  sinking  fund  leaves  the  net  profits 
$71,162.  The  revenue  account  of  the  electric  lighting 
shows  a  working  profit  of  $88,696,  from  which  there 
are  to  be  deductions  for  interest  on  loans,  sinking  fund, 
and  meter  installments,  leaving  the  net  profit  $7,976. 
The  working  profit  on  account  of  the  street  cars  for 
the  year  was  $185,238,  from  which  $48,329  is  to  be 
deducted  for  interest  on  loans  and  $45,700  for  the 
sinking  fund,  and  $37,400  to  be  transferred  to  the  re- 
serve fund,  making  the  credit  balance  for  this  year 
$57,500.  In  each  instance,  then,  with  the  exception 
of  the  crematory  and  the  baths,  the  municipalization  of 
public  utilities  in  Hull  has  resulted  in  profit  to  the  city 
treasury.  The  profit,  it  is  true,  is  small,  but  it  must 
be  remembered  that  the  charges  for  these  public  services 
are  extremely  low.  A  ride  on  the  street  cars  in  any 
direction  to  the  end  of  the  line  costs  only  two  cents ;  an 
exclusive  telephone  in  a  private  house  costs  less  than 
$25  a  year,  and  in  a  business  office  about  $30  a  year. 
Gas  is  sold  at  forty-eight  cents  per  thousand  feet  and 
electricity  at  nine  cents  per  unit.     The  object  is  not 

124 


ADVANTAGES   OF   MUNICIPAL   OWNERSHIP 

so  much  to  make  a  profit  for  the  city  out  of  these 
utilities  as  to  furnish  the  public  with  the  best  service  at 
the  lowest  possible  price.  Viewed  in  this  light  munici- 
palization in  Hull  can  be  pronounced  a  success." 

In  1903  the  New  York  Merchants'  Association  in- 
vestigated the  question  of  the  relative  cost  of  electric 
lighting,  which  showed  the  cost  per  arc  light  for  im- 
portant cities,  reckoning  on  a  2,000-candle-power  basis, 
as  follows: 

New  York $146.00 

Boston 124.10 

Albany 121.80 

Philadelphia 110.12 

MinneapoHs 108.50 

Denver 90.00 

The  New  York  Legislature  has  recently  reduced  the 
rate  in  New  York  City  to  $100.  In  San  Francisco  the 
rate  is  $130,  and  it  now  pays  the  highest  rate.  Now 
compare  these  rates  with  those  of  cities  which  own  their 
own  lighting  systems.  Grand  Rapids,  with  interest 
and  depreciation  added,  $62.01  ;  Detroit,  also  including 
interest  and  depreciation,  .$79.65,  which  has  since  been 
greatly  reduced ;  Chicago,  $53.57,  with  a  small  amount 
to  be  added  for  interest  and  depreciation,  say  altogether 
$60. 

A  peep  ahead  should  show  the  people  of  New  York 
City  the  importance  of  acquiring  public  utilities  for 
that  city  at  once.  The  city  is  growing  rapidly,  nor 
can  anyone  tell  when  or  where  the  increase  of  popu- 
lation and  wealth  are  to  stop.  The  completion  of  sub- 
ways and  tunnels  now  projected  will  not  only  cause  a 
great  increase  but  a  readjustment  of  population.  The 
time  is  not  far  off  when  Manhattan  Island  will  be  prin- 
cipally occupied  with  business,  and  the  population  will 
mostly  reside  in  suburban  cities.     This  will  greatly  en- 

125 


BOSSISM    AND    MONOPOLY 

hance  the  importance,  not  only  of  transportation  service, 
but  of  lighting  and  telephone  service  as  well.  Not  many 
years  will  elapse* until  all  of  Long  Island  and  West- 
chester County  will  be  as  near,  for  practical  purposes, 
to  the  business  center  as  Harlem  is  now,  ajid  each  will 
contain  its  millions  of  inhabitants.  Every  increase  of 
population,  each  expansion  of  occupied  territory,  will 
greatly  increase  the  profits  of  public  service  and  offer 
a  pretext  for  an  inflation  of  capitalization  to  cover  up 
and  conceal  those  profits.  What  would  municipal 
ownership  do  for  New  York.''  It  would  reduce  rates 
and  fares,  add  to  the  efficiency  of  service,  overthrow  boss 
rule,  dispense  with  strikes,  better  the  conditions  of  la- 
bor, and  to  a  great  extent,  or  entirely,  relieve  the  people 
from  the  payment  of  taxes.  What  does  the  perpetua- 
tion of  the  present  system  of  private  ownership  signify.'' 
It  signifies  boss  rule,  with  its  attendant  political  cor- 
ruption, the  transfer  day  by  day  of  the  cream  of  the 
profits  of  business  and  earnings  to  the  capacious  coffers 
of  grasping  private  corporations.  It  means  that  no 
one  can  go  in  comfort  and  speed  from  place  to  place, 
or  see  at  night,  or  use  a  telephone,  except  by  leave  of 
private  institutions  possessed  of  all  the  power  that  can 
be  practically  exerted  over  individuals  and  public  offi- 
cials. Do  the  people  owe  more  to  political  machines 
and  trusts  than  to  themselves?  If  not,  they  should  not 
postpone  the  issue  of  municipal  ownership,  but  settle 
it  at  once,  and  settle  it  right. 

The  experiences  of  American  cities  which  have  al- 
ready acquired  waterworks  and  lighting  plants  are 
assurances  of  the  savings  to  the  people  to  result  from 
public  ownership  of  other  utilities.  Years  ago  the  city 
of  Chicago  established  its  own  waterworks ;  to-day  it 
has  a  system  whose  efficiency  is  phenomenal.  Out  of 
its  revenues,  aggregating  during  the  entire  period  from 
forty-five  to  fifty  millions  of  dollars,  a  sewerage  sys- 

126 


ADVANTAGES  OF   MUNICIPAL   OWNERSHIP 

tem  costing  $5,000,000  has  been  constructed,  and  there 
is  a  surplus  of  an  equal  amount  in  the  city  treasury  to 
the  water-fund's  credit,  available  for  "use  in  the  acquisi- 
tion of  other  utilities.  The  same  city  has  an  electric- 
lighting  system  which  has  reduced  the  cost  per  arc  lamp 
from  $125  to  $54  a  year,  and  Mayor  Dunne  predicts 
that  it  will  not  be  many  years  before  the  citizens  of 
Chicago  will  be  looking  back  upon  $54  as  an  enormous 
cost  for  an  arc  lamp,  and  that  the  people  will  be  look- 
ing back  upon  their  bills  of  the  present  time  as  the 
incidents  in  the  scheme  of  a  terrifying  nightmare. 

It  is  very  much  to  the  interest  of  every  class,  but 
especially  to  the  local  business  man  to  have  the  profits 
realized  by  the  sale  of  public  utilities  and  service  dis- 
tributed and  used  in  the  community  where  they  are 
supplied.  Since  under  government  ownership,  after  the 
necessity  of  a  sinking  fund  ceases,  there  will  be  no 
surplus  profits,  the  millions  of  dollars  that  now  go  for 
profits  in  the  form  of  dividends  will  remain  in  the 
pockets  of  the  people  to  be  locally  expended.  The 
profits  of  operating  the  Manhattan  Elevated  in  New 
York  now  go  principally  to  the  Gould  family  and  of 
the  Subway  to  the  Rothschilds.  How  much  of  it  is 
spent  in  New  York.''  The  gas  and  electric  systems  are 
controlled  by  the  Standard  Oil  Company.  How  much 
of  the  many  millions  paid  out  of  these  stocks  are  spent 
with  New  York  merchants?  J.  Pierpont  Morgan's  syn- 
dicate now  owns  what  is  left  of  the  Chicago  traction  sys- 
tem and  spreads  the  profits  received  therefrom  all  over 
creation.  The  controlling  interest  in  the  United  Rail- 
ways of  St.  Louis  and  San  Francisco  are  alien ;  and 
Standard  Oil  is  now  reputed  to  control  the  San  Fran- 
cisco Gas  and  Electric  Light  companies.  Very  little 
of  the  stock  of  the  telephone  company  holding  and 
operating  the  most  exasperating  of  all  monopolies  in 
San  Francisco  is  owned  there. 

127 


BOSS  ISM    AND    MONOPOLY 

In  most  European  countries  public  utilities  of 
nearly  every  kind  are  owned  and  operated  by  the  people 
in  their  collective  capacity.  There  is  found  in  the 
ranks  of  those  thus  employed  more  contentment,  more 
sobriety,  more  honesty,  more  fidelity  to  duty,  than  in 
any  field  of  privately  owned  enterprise.  The  same  is 
true  with  respect  to  the  public  utilities  thus  far  acquired 
and  operated  by  Government  in  the  United  States.  We 
see  in  the  post-office  department  and  the  public  schools, 
each  employing  many  thousands,  a  confirmation  of  the 
above  statement.  In  most  of  our  cities  some  of  the 
public  utilities  are  already  operated  by  Government. 
Little  trouble,  such  as  the  opponents  of  municipal 
ownership  suggest,  has  been  heard  of  in  any  of  them. 

Municipal  ownership  naturally  raises  the  rate  of 
wages  in  addition  to  shortening  the  hours  of  labor. 
This  is  made  possible  by  the  saving  of  interest  and 
dividend  charges.  Such  has  been  one  of  the  results 
wherever  it  has  been  tried.  In  Glasgow  the  increase  in 
wages  under  municipal  over  private  ownership  was  over 
twenty-five  per  cent.  Salaries  then  were  twenty-two  to 
twenty-four  shillings  per  week ;  now  they  average 
thirty  shillings  for  the  ordinary  employees.  They  work 
only  six  days  in  each  week  and  a  reasonable  number  of 
hours  per  day.  True,  these  earnings  are  small  in  com- 
parison with  wages  for  similar  service  in  this  country, 
but  the  same  difference  is  found  in  every  line  of  em- 
ployment. 

And  yet,  notwithstanding  all  the  convincing  argu- 
ments in  favor  of  public  ownership,  when  courageous 
men  like  Andrew  Carnegie,  J.  G.  Phelps  Stokes,  and 
many  others  propose  municipal  ownership,  one  must  lis- 
ten to  the  sophistries  of  lawyers  who  are  highly  paid  to 
suggest  legal  difficulties,*  and  to  the  orator — subsidized 
by  the  corporations  through  the  boss — while  they  depre- 
cate the  opening  of  a  wider  field  to  the  grafter  and 

128 


ADVANTAGES  OF  MUNICIPAL   OWNERSHIP 

practical  politician.  And,  finally,  our  average  citi- 
zen's banker,  or  some  financier  who  tolerates,  pro  hdc 
vice,  intimate  relations  with  him,  may  declare  the  prop- 
osition to  be  socialistic.  And  thus  his  better  impulses, 
his  wiser  and  more  reasonable  resolutions,  are  repressed 
and  he  falls  back  into  the  old  filthy  rut  of  ultra- 
conservatism,  submitting  to  daily  robbery  sanctioned  by 
legal  forms.  The  party  lash  may  be  applied  as  a  last 
resort.  Some  leader  of  the  party  to  which  he  thinks  he 
belongs — perhaps  a  member  of  Congress  or  a  member 
of  the  Legislature  with  a  railroad  pass  in  his  pocket — 
will  manage  to  meet  him  by  chance,  as  it  were,  and 
flatter  him  by  intimations  of  the  esteem  in  which  he 
is  held  by  "  the  organization,"  and  the  opportunities 
he  is  throwing  away  by  identifying  himself  with  that 
crowd  who  would  build  up  socialism  and  contribute  to 
the  defeat  of  the  dear  old  party.  This  argument  is 
addressed  of  course  to  the  vanity  and  selfishness  of  our 
citizen  friend. 

But  several  stock  arguments  are  kept  constantly  on 
tap  by  the  hired  agents  of  corporations,  those  owning 
newspapers  as  well  as  the  others.  These  are  addressed 
to  the  fear  and  ignorance  of  the  voter.  First,  they  say 
that  it  would  not  pay ;  that  the  government — for  in- 
stance that  of  a  city — would  lose  money  by  running  its 
own  street  cars,  or  furnishing  water,  or  supplying  light, 
or  controlling  the  telephone  service,  and  that  any  such 
experiment  would  result  in  additional  taxes.  But  he  is 
never  told,  nor  ought  it  to  be  necessary  to  inform  him, 
that  he  is  already  taxed  by  the  public-service  corpo- 
rations to  pay  interest  and  dividends  in  addition  to 
operating  expenses ;  and  then  that  even  if  it  were  true 
that  a  small  tax  would  result  to  make  up  a  deficit  in 
earnings,  it  would  be  a  great  deal  less  than  the  divi- 
dend charge  of  which  he  would  be  relieved  under 
municipal  ownership.     But  how  can  there  be  a  deficit 

129 


B0SSIS3J    AND    MONOPOLY 

unless  as  soon  as  a  city  gets  control  people  should  quit 
riding  on  the  cars,  and  using  water,  and  begin  to  grovel 
in  darkness,  and  carry  their  messages  instead  of  using 
the  "'phone"?  Secondly,  it  is  urged  that  party  ma- 
chines will  be  strengthened  and  great  official  corruption 
will  result  from  public  ownership. 

One  of  those  who  trembles  at  the  political  results  of 
municipal  ownership  is  a  certain  gentleman  who  many 
years  ago  came  out  of  the  commonwealth  of  Pennsyl- 
vania, descended  upon  Chicago,  and  became  and  con- 
tinued for  years  to  be  a  great  street-railway  magnate. 
He  became  several  times  a  millionaire  as  a  result  of 
corrupt  dealings  with  aldermen  having  power  to  grant 
franchises,  and  now  he  has  become  a  patriot.  He  now 
testifies  that  "  municipal  ownership  is  the  commence- 
ment of  a  socialistic  end,  and  a  reign  of  blackmail  and 
corruption."  It  verges  upon  the  humorous  to  see 
machine  politicians  and  corporation  orators  protesting 
against  the  movement  for  public  ownership  to  avoid 
the  contamination  of  official  life. 

Another  objection  urged  by  opponents  of  pubhc 
ownership  is  on  the  score  of  the  superior  skill  in  oper- 
ation under  private  control.  To  make  good  this  ob- 
jection it  is  assumed  that  the  moment  employees  be- 
come public  servants  they  become  oblivious  to  duty, 
forget  the  knowledge  acquired  by  experience,  and  are 
immediately  transmuted  from  skilled  operatives  into 
unskilled  amateurs.  This  objection  runs  counter  to 
historical  fact,  and  is  altogether  too  absurd  to  require 
further  notice. 

An  objection — and  it  must  be  admitted  the  most 
serious  of  all — is  based  upon  the  rights  and  equities  of 
stockholders.  The  people  would  never  consent  to  pay 
the  stockholders  the  artificial  market  values  given  the 
stocks  by  inside  manipulation.  Only  the  bonds  repre- 
senting actual  investment  could  be  provided  for  at  their 

130 


ADVANTAGES   OF   MUNICIPAL   OWNERSHIP 

face  value.  In  most  cases  the  plants  and  equipments 
have  been  exclusively  constructed  with  borrowed  money, 
and  the  stocks  represent  only  water,  or  at  most  merely 
the  franchises  that  have  been  acquired  for  nothing, 
often  as  a  result  of  bribery.  Much  the  largest  per- 
centage of  the  stocks  will  be  found  in  the  strong  boxes 
of  those  who  have  been  instrumental  in  thus  acquiring 
the  franchises,  and  who  also  own  the  bonds.  But 
to  all  stockholders  the  maxim  caveat  emptor  applies. 
Long  prior  to  the  acquisition  of  any  such  stock  by  any 
present  owners  the  question  of  government  ownership 
was  being  agitated ;  and  there  has  always  been,  with 
reference  to  each  and  every  privately  owned  public 
utility,  the  possibility,  and  in  recent  years  the  proba- 
bility, that  they  would  be  taken  over  in  the  exercise  of 
the  right  of  eminent  domain.  Those  who  have  advo- 
cated government  ownership  have  always  contended 
that  only  the  cost  of  construction  should  be  paid.  No 
one  has  any  right  to  claim  ignorance  of  what  would 
measure  the  compensation  to  be  paid.  If  stockholders 
have  become  such  with  that  knowledge,  and  have  held 
on  to  the  stocks,  or  subsequently  neglected  to  get  rid 
of  them  at  the  market  price,  they  will  have  no  cause 
for  complaint  in  case  they  suffer  a  loss  in  the  transfer 
from  private  to  public  control  of  the  property  repre- 
sented by  the  shares.  The  world  cannot  stand  still, 
civilization  cannot  wait  on  private  convenience  and  in- 
terest. With  equal  plausibility  was  the  introduction  of 
steam  railways  opposed  because  it  deprived  teamsters 
of  employment.  No  doubt  the  advent  of  the  telephone 
was  distasteful  to  the  messenger  boys.  The  armor- 
plate  industry  no  doubt  secretly  resents  the  propaganda 
of  the  International  Peace  Congress. 

Finally,  the  opponents  will  admit  the  benefits  of 
government  ownership  in  theory,  but  assert  that  we  are 
not  ready,  or  that  the  time   is  not   ripe   for  it.      The 

131 


BOSSISM    AND    MONOPOLY 

people  are  always  ready  for  any  useful  innovation  and 
can  adapt  themselves  to,  and  utilize  to  the  full  extent, 
each  economic  change.  The  world  was  ready  for  pub- 
lic schools  and  government  postal  systems  centuries 
before  they  came.  Had  the  uses  of  steam  and  elec- 
tricity been  known  before  the  fall  of  the  Roman 
Empire,  civilization  would  to-day  be  far  ahead  of  pres- 
ent social  conditions.  Costly  wars,  waste  of  energy 
and  property,  and  much  suffering  would  have  been 
averted.  Had  our  governments,  general  and  local,  con- 
summated public  ownership  years  ago,  when  the  advan- 
tages, yea,  the  necessity  for  it,  were  first  known,  few 
of  our  present  economic,  industrial,  and  political  ills 
would  ever  have  been  visited  upon  us.  As  well  might 
it  be  claimed  that  the  Declaration  of  Independence  was 
all  a  mistake;  that  our  forefathers  were  not  really 
ready  to  tlu-ow  off  the  foreign  yoke.  Every  city  in  the 
United  States  is  ready  to  own  and  operate  its  own 
water,  lighting,  street-car,  and  telephone  service;  and 
the  Federal  Government  is  ready-equipped,  in  full 
heaped  and  rounded  measure,  for  the  ownership  and 
operation  of  all  interstate  railroads,  telegraph  and  tele- 
phone lines ;  just  as  ready  as  it  will  ever  be ;  readier,  in 
fact,  than  when  at  its  birth  it  instituted  the  postal  sys- 
tem and  made  the  Post  Office  a  principal  head  of  the 
Executive  Department.  All  that  is  needed  is  a  little 
more  self-confidence,  public  spirit,  and  courage  on  the 
part  of  the  people;  a  mere  remnant  of  that  which  in- 
spired the  revolutionary  patriots  to  take  their  flint- 
locks and  enlist  under  George  Washington  against  the 
hosts  of  King  George. 

The  hirelings  of  monopoly  appeal  to  what  they 
call  the  sense  of  justice,  and  call  for  "  fair  play  "  on 
the  score  of  achievement  and  public  benefits  conferred  by 
public-service  corporations.  And  such  specious  meth- 
ods of  combating  the  demand   for  lower  rates  or  for 

132 


ADVANTAGES  OF   MUNICIPAL   OWNERSHIP 

government  ownership  often  make  a  deep  impression, 
owing  to  the  absence  of  anyone  of  sufficient  abihtj  to 
meet,  counteract,  and  overthrow  them.  In  all  cases 
of  a  section  of  country  or  district  of  a  city  being  bene- 
fited by  an  increase  of  population  and  a  rise  in  the 
value  of  property,  it  is  safe  to  assume,  and  can  be 
usually  demonstrated  as  a  fact,  that  there  would  have 
been  considerable  increase  and  improvement  without 
the  advent  of  the  corporate  enterprise,  and  that  this 
was  foreseen ;  either  that,  or  that  these  were  merely 
accelerated  by  the  advent  of  rapid  transportation  and 
other  public  service.  The  advantages  of  such  invest- 
ments are,  as  a  matter  of  fact,  always  carefully  weighed 
and  are  never  made  unless  the  chances  are  many  to  one 
that  they  will  prove  profitable.  Public  benefits,  the 
comfort  and  prosperity  of  individuals,  and  public  prog- 
ress, if  considered  at  all,  are  given  scant  consideration. 
Then  what  basis  is  there  for  putting  such  considera- 
tions in  the  scale  at  all.''  Such  so-called  adjuncts  are 
often  advanced  with  reference  to  public  service  in  cities. 
One  will  hear  the  argument  of  benefits  conferred  ad- 
vanced from  the  most  unexpected  sources.  It  runs  thus : 
that  the  value  of  lots  has  been  greatly  enhanced  by  the 
construction  of  a  tramway  on  them,  or  by  the  opening 
of  an  adjacent  street,  therefore  the  monopoly  in  private 
hands,  with  all  that  it  signifies,  should  be  continued  in- 
definitely. In  the  first  place,  it  would  in  most  cases  be 
difficult  to  prove,  except  as  to  outlying  districts  ren- 
dered more  accessible,  that  any  value  has  been  added 
to  any  particular  lot  by  increased  street-car  facili- 
ties. Of  course  the  extension  of  street-car  service  to 
all  parts  of  a  city  increases  the  value  of  property  gen- 
erally. But  often  property  on  a  street  is  all  the  more 
valuable  by  reason  of  its  exemption  from  use  for  street- 
car traffic,  of  which  instances  occur  to  those  well  in- 
formed.    In  the  second  place,  the  value  in  the  form  of 

133 


BOSSISM    AND    MONOPOLY 

easements  in  the  streets  which  have  been  surrendered 
by  subservient  and  corrupt  municipal  legislators,  the 
value  aggregating  in  any  great  city  many  millions  of 
dollars,  and  made  the  basis  of  bond  and  stock  issues  to 
two  or  three  times  that  amount,  is  conveniently  evaded 
by  the  monopoly  representatives. 

One  of  the  arguments  of  the  opposition  is  that  good 
management  and  safe  operation  require  direct  super- 
vision of  the  owner,  and  that  under  public  ownership  too 
much  will  be  left  to  agents  and  employees  not  directly 
responsible  nor  under  the  immediate  supervision  of  the 
owner.  But  the  proponents  of  government  ownership 
have  the  best  of  the  argument  on  that  score.  How 
many  street  railway,  gas  and  electric  lighting  systems 
of  large  cities  in  the  United  States  are  locally  owned.'' 
How  many  controlling  interests  in  them  are  held  by 
residents  or  have  the  direct  care  and  supervision  of  such 
owners.?  Not  one.  Everything  is  done  by  interme- 
diaries. Take  the  case  of  the  street  railways ;  we  find 
a  controlling  interest  in  the  stocks  of  each  held  on 
deposit  by  New  York  trust  companies,  sometimes  in  the 
names  of  other  artificial  agents  called  "  holding  com- 
panies," thus  removing  them  another  stage  from  per- 
sonal supervision.  In  other  cases — and  this  is  the  rule 
with  street  railroads,  gas  and  electric  lighting  com- 
panies— we  find  the  control  in  the  hands  of  syndicates 
which  have  an  office,  and  a  manager  in  charge,  in  some 
city  hundreds  of  miles  away.  The  ph^^sical  property  is 
in  the  hands  of  a  manager  who  is,  after  all,  simply  an 
agent,  an  employee  over  other  agents  and  employees, 
attorneys,  superintendents,  foremen,  dowm  to  car  clean- 
ers or  coal  heavers.  The  syndicate  manager  telegraphs 
an  order  and  every  local  manager  and  subordinate  has- 
tens to  obey.  And  this  is  itself  a  strong  argument  in 
favor  of  public  ownership  and  control.  Men  selected 
for  employment  by  the  monopolies  are  so  intelligent,  so 

134 


ADVANTAGES   OF   MUNICIPAL   OWNERSHIP 

responsive  and  faithful,  that  they  can  be  trusted  at  a 
distance  of  thousands  of  miles  and  in  great  masses  with 
the  handling  of  properties  worth  millions  of  dollars, 
owned  by  others  whom  they  have  never  seen  and  never 
expect  to  see,  although  their  compensation  out  of  enor- 
mous profits  is  a  scant  livelihood  for  themselves  and 
families.  More  than  a  million  men  are  employed  in  this 
country  dispatching  and  moving  trains,  maintaining 
tracks,  collecting  hundreds  of  millions  of  dollars  from 
travelers  and  shippers,  and  turning  that  vast  sum  into 
the  coffers  of  men  never  going  West  of  New  York  or 
Chicago,  except  on  flying  trips  of  inspection  or  in 
quest  of  pleasure.  It  is  absurd  to  say  that  the  same 
local  managers,  superintendents,  and  their  subordinates 
will  not  render  as  good,  or  even  better  service  when  the 
honor  and  dignity  of  being  in  government  employ  is 
added  to  their  present  trust  and  calling.  A  striking 
illustration  of  the  artificial  character  of  ownership  and 
supers'ision  is  offered  by  the  history  of  the  street  rail- 
ways of  San  Francisco.  All  except  the  California 
Street  cable  lines,  the  Geary  Street  line,  and  one  or  two 
short  lines  now  constitute,  by  consolidation,  the  United 
Railways  of  San  Francisco,  capitalized  at  over  $40,- 
000,000,  about  four  times  the  cost  of  construction  and 
equipment.  Three-fourths  of  this  exaggerated  capi- 
talization is  based  upon  franchises  and  prospective 
earning  power,  what  the  single  taxers  designate  as  the 
"  unearned  increment."  Recently,  and  so  quietly  that 
the  local  management  had  no  hint  of  it  until  it  had  been 
done,  the  control  of  the  United  Railways  was  turned 
over  by  the  Baltimore  syndicate  to  a  New  York  syndi- 
cate representing  a  foreign  syndicate.  So  that  now 
there  is  an  intermediate  control  between  the  local  man- 
agers and  the  primary  control,  which  has  its  seat  be- 
yond the  Atlantic.  Now,  when  organized  labor  or  the 
city  government  has  to  deal  with  that  company,  nego- 
10  135 


BOSS  ISM    AND    MONOPOLY 

tiations  must  be  ultimately  consummated  with  foreign 
capitalists  owing  no  allegiance  to  our  country's  flag,  and 
having  no  sympathy  with  free  government  or  the  aspi- 
rations of  free  men.  ** 

The  real  motives  of  political  bosses  for  opposing 
municipal  ownership  are,  of  course,  corrupt;  that  is  to 
say,  such  ownership  would  dry  up  rich  streams  of  revenue 
which  have  their  sources  in  the  earnings  of  all  the  people 
who  use  the  public  utilities.  The  ostensible  grounds  of 
opposition  are  various — some  political,  some  taking  the 
form  of  appeals  to  personal  interest.  But  that  which 
seems  to  be  the  most  effective  is  an  appeal  to  the  fears 
and  prejudices  of  the  majority  against  socialism.  It  is 
past  comprehension  how  property  owners  and  others 
can  be  misled  and  hoodooed  by  the  use  of  a  mere  name; 
how  they  can  be  persuaded  that  if  they  take  a  remove 
from  evils  which  are  almost  intolerable,  and  thereby  re- 
store to  their  government  what  is  considered  and  exer- 
cised as  a  governmental  function  in  countries  ruled  by 
kings  and  emperors,  a  change  will  thus  be  wrought  in 
our  form  of  government. 


136 


CHAPTER    VII 

EVILS  OF,  AND  ABUSES  BY,  RAILROADS  IN  PRIVATE  HANDS 
NATURAL  MONOPOLIES  AND  BASIS  FOR  COMBINA- 
TION     STRONGER      THAN      THE      GOVERNMENT "  THE 

KINGDOM    OF    HIGH    FINANCE  " 

Verily,  transportation  is  an  essential  factor  in  the 
pursuit  of  a  livelihood.  As  well  speak  of  life  in  a 
vacuum  as  industrial  motion  and  commercial  intercourse 
without  railroads.  It  follows  that  those  controlling  ex- 
clusively the  machinery  with  which  goods  and  persons 
are  carried  from  place  to  place  hold  in  their  hands,  ab- 
solutely, more  power  for  good  or  evil  than  all  the  mer- 
chants and  all  the  laborers  of  the  country  combined; 
and  all  other  classes  are  so  far  dependent  upon  them 
that  they  must  have  that  in  which  the  railroads  deal, 
namely,  transportation,  regardless  of  cost.  Moreover, 
while  under  nominal  conditions  there  would  be  no  limit 
to  competition  in  mercantile  and  industrial  pursuits,  yet 
in  the  matter  of  transportation  by  rail  the  competitors 
are  necessarily  few,  and  from  the  territory  controlled  by 
one  company  others  are  excluded  by  the  very  fact  of  its 
presence.  Hence,  a  railroad  is  the  most  complete  form 
of  monopoly  of  which  the  human  mind  can  conceive. 
Its  power  is  not  less  in  respect  to  the  power  it  confers 
than  a  monopoly  of  air  or  water.  The  people  can 
endure  a  monopoly  in  a  luxury,  they  can  exist  in  mod- 
crate  comfort  in  the  presence  of  a  monopoly  of  a  single 
article  of  necessity,  fixing  a  price  just  below  the  pro- 
hibitory point ;  but  they  cannot  long  endure  a  monopoly 
in    transportation    which    exacts    unjustly    high    tolls, 

137 


BOSS  ISM    AND    MONOPOLY 

though  giving  it  but  a  small  per  cent  of  advantage 
over  any  other  department  of  industry.  Owing  to  the 
fact  that  such  a  large  proportion  of  the  country's  capi- 
tal is  invested  in  railroad  property,  one  per  cent  of 
return  on  investment  in  excess  of  the  average  in  all 
other  lines  of  effort  will  in  a  few  decades  enable  the 
railroad  interests  to  absorb  all  the  solid  property  of 
the  nation.  That  the  exactions  by  the  railroads  are  un- 
reasonable, unjust,  extortionate,  and  out  of  all  propor- 
tion to  the  rewards  in  other  fields  will  be  conclusively 
shown  in  a  subsequent  chapter. 

In  order  to  increase  the  volume  of  traffic  railway 
managements  must,  of  course,  adjust  their  rates  so  as 
to  allow  the  shipper  a  profit  that  will  induce  him  to 
continually  enlarge  his  operations.  Beyond  this  they 
need  not,  and  seldom  do  go.  The  margin  of  profit 
above  this  necessary  amount  can  be  taken  from  the 
shipper  with  impunity.  In  this  sense  the  railroads  of 
the  country  exact  all  the  traffic  will  bear. 

It  is  an  economic  law  that  any  improved  mechanism 
or  process  supplants  and  supersedes  that  which  before 
existed.  The  uniform  operation  of  this  law  has  been 
very  forcibly  demonstrated  in  the  case  of  the  compara- 
tively modem  railway.  Even  at  moderately  high  rates 
the  use  of  the  wagon  road,  and  in  many  instances  of 
the  water  way,  is  impracticable  and,  for  distant  traffic, 
ruinously  expensive. 

The  expense  and  difficulties  attending  the  acquisi- 
tion of  adequate  terminal  facilities  is  constantly  and 
rapidly  increasing.  The  surrender  of  the  Baltimore 
&  Ohio  to  the  Pennsylvania  was  largely  due  to  the 
enormous  cost  of  entering  Philadelphia,  which  appeared 
to  be  necessary  to  its  continuing  the  payment  of  the  in- 
terest on  its  bonds  out  of  its  earnings.  But  the  drain 
on  its  resources  for  a  Philadelphia  terminal  was  so  great, 
and  the  prospect  so  remote  of  its  resuming  the  pay- 

138 


MONOPOLIES    AND    THE    GOVERNMENT 

mcnt  of  dividends  on  its  stock,  that  its  stock  greatly 
depreciated,  so  that  the  Pennsylvania  Company  ob- 
tained a  controlling  interest  at  a  low  price. 

The  readers  of  newspapers  and  magazines  are 
treated  to  a  great  deal  of  certain  kinds  of  information 
about  current  railroad  affairs  and  railroad  officials. 
The  reports  of  earnings,  improvements,  contemplated 
improvements,  and  changes  of  management  are  given 
considerable  space.  But  the  fact  that  the  "  gentlemen's 
agreement,"  taking  the  place  of  the  outlawed  pool, 
has  completely  eliminated  competition  in  passenger  and 
freight  rates  from  all  points  between  the  Mississippi 
River  and  eastern  cities  is  seldom  mentioned.  At  Chi- 
cago, for  instance,  one  can  travel  by  either  of  several 
roundabout  lines  to  New  York  at  a  "  differential "  rate, 
which  is  cheaper  than  by  one  of  the  direct  and  shorter 
lines,  but  it  is  a  high  rate  at  that.  The  rate  is  the 
same  whether  one  travels  east  or  west.  Whatever  may 
be  said  about  the  cheapening  of  rates,  it  cannot  be 
denied  that  passenger  rates  east  of  the  Mississippi  are 
higher  than  before  competition  was  destroyed.  More- 
over, the  present  arrangement  between  the  great  mag- 
nates who  control  the  roads  has  been  in  force  for  a 
number  of  years,  during  wliich  there  has  been  no  re- 
duction but  rather  an  increase  of  rates.  Not  only  so, 
but  they  have  made  the  construction  of  any  line  in 
competition  with  existing  lines  next  to  impossible.  It 
is  probable  that  the  Goulds  may  reach  Baltimore  with 
a  line  connecting  the  Wabash  with  the  seaboard  at  that 
point,  but  that  is  the  utmost  that  can  be  hoped  for.  If 
industrial  development  and  increase  of  population  ren- 
der new  roads  necessary,  they  will  be  built  by  existing 
great  trunk  lines  as  branches,  but  not  by  independent 
organizations.  And  railroad  interests  west  of  the 
Mississippi  are  rapidly  crystallizing  in  the  same  way. 
Therefore,  the  bond  and  stock  issues  of  the  railroads 

139 


BOSSISM    AND    MONOPOLY 

are  just  as  much  a  mortgage  upon  all  the  people  and 
all  the  property  now  in  the  country,  and  upon  that 
which  succeeds  the  present  generation,  as  are  the  bonds 
of  the  Federal  Government. 

The  law  of  competition  is  inoperative  and  fails  to 
furnish  any  protection  in  the  field  of  railway  enterprise 
and  development  except  for  brief  periods.  How  often 
have  cities,  towns,  and  communities  agitated,  expended 
time  and  money,  and  burdened  themselves  with  bonded 
indebtedness  until  a  rival  line  was  secured;  and  how 
often,  when  the  coveted  competitor  was  secured,  have 
they  seen  it  swallowed  up  by  the  stronger  companies  at 
the  maturity  of  the  first  installment  of  indebtedness? 
Setting  one  natural  monopoly  to  compete  with  another 
has  been  tried  a  thousand  times,  but  always  with  the 
same  result.  Even  without  consolidation  nine-tenths  of 
the  railroad  business  in  the  United  States  would  be  con- 
ducted under  iron-clad  agreements.  These  agreements 
usually  cover  not  only  rates,  but  speed,  wages,  etc. 
Recently  it  leaked  out  that  the  railroads  of  the  North- 
west had  agreed  not  to  exceed  a  certain  rate  of  speed 
between  Chicago  and  certain  western  and  northwestern 
points.  England  and  France  have  had  the  same  ex- 
perience as  the  United  States  in  attempts  to  either  regu- 
late or  to  secure  the  benefits  of  competition.  Govern- 
ment ownership  is  the  only  remedy.  Monopolies  cannot 
be  left  to  manage  themselves. 

From  what  has  preceded,  it  seems  clear  that  the 
power  possessed  by  the  owner  of  the  only  available 
means  of  transportation  is  too  great  to  be  intrusted  to 
a  few  individuals  however  honest  and  patriotic.  Such 
power  is  an  attribute  of  sovereignty.  It  affects  the 
entire  people  more  directly  than  any  now  recognized 
function  of  the  Government;  it  should  be  held  and  ex- 
ercised by  the  people  in  their  organized  capacity  for  the 
benefit  of  all,  and  should  be  no  longer  held  and  used 

140 


MONOPOLIES    AND    THE    GOVERNMENT 

for  the  impoverishment  of  the  many  to  the  aggrandize- 
ment and  enrichment  of  a  comparatively  few. 

When  a  raih'oad  invites  a  shipper  or  traveler  to 
either  pay  its  price  or  furnish  his  own  means  of  trans- 
portation, it  invites  him  to  do  without  that  essential 
commodity  entirely.  Little  argument  is  required  to 
show  that  railroads  practically  fix  the  margin  of  profit 
on  commerce  and  the  cost  of  living  of  every  citizen,  and 
thereby  the  rate  of  wages.  Many  able  writers  have 
clearly  set  forth  this  truth. 

Prof.  Richard  T.  Ely,  in  an  article  in  Harper's 
Magazine  for  July,  1886,  said:  "We  discover  a  uni- 
versal dependence  on  the  railway.  Does  the  reader 
remind  me  of  other  means  of  communication  and  trans- 
portation? The  reply  is  evident  on  a  moment's  reflec- 
tion. It  is  a  law  of  political  economy  that  the  more 
perfect  highway  at  once  steps  into  the  position  of  a 
monopolist  with  reference  to  inferior  highways.  But 
it  needs  no  law  of  political  economy  to  teach  the  farmer 
or  the  merchant  that  for  most  purposes  he  must  use 
the  railway,  or  entirely  abandon  his  attempt  to  gain  a 
livehhood." 

Equally  clear  is  the  expression  of  Mr.  A.  B.  Stick- 
ney,  himself  a  railroad  president.  In  a  recent  work,  en- 
titled "  The  Railway  Problem  "  (pages  31,  32),  he  says : 
"  Railway  transportation,  under  present  conditions,  is 
to  the  industrial  world  what  the  atmosphere  is  to  the 
physical  world.  It  pervades  and  is  essential  to  all  in- 
dustries. As,  in  the  physical  world,  no  man  or  beast, 
no  plant  or  shrub,  can  refuse  to  breathe  the  air  without 
death  ensuing,  so  in  the  industrial  world  no  industry, 
nor  any  human  being,  can  refuse  railway  transportation 
except  under  similar  penalties.  Who  would  consent  that 
a  few  men  should  have  the  power  to  dictate  upon  what 
terms  the  air  should  be  breathed?  It  is  idle  to  talk 
about  railway   transportation  being  a  mere  article  of 

141 


BOSSISM    AND    MONOPOLY 

commerce  owned  by  the  company,  who  as  such  owner 
may  sell  it  or  not  as  he  may  see  fit;  or,  if  he  elects  to 
sell,  may  demand  such  price  as  he  chooses  or  can  ob- 
tain. It  is  nonsense  to  call  that  merchandise  which  no 
man  can  refuse  to  purchase." 

But  no  one  has  presented  this  phase  of  the  question 
so  forcibly  and  clearly  as  George  H.  Lewis,  Esq.,  of 
Des  Moines,  Iowa,  in  a  work  entitled  "  National  Con- 
solidation of  Railways  of  the  United  States."  At  the 
close  of  Chapter  XI  he  says :  "  This  system  is  the  vital 
air  of  our  great  business  enterprises  and  the  life  of 
great  cities  and  States.  It  ministers  to  the  leisure  and 
enjoyment  of  the  rich  and  aids  in  the  recreation  and 
health  of  the  many.  Without  it  modem  life  would 
perish  and  modern  society  become  an  irretrievable 
wreck.  But  to  just  the  extent  that  railroads  are  a 
necessity  do  they  constitute  also  a  monopoly.  Their 
influence  pervades  every  avenue  of  business  and  every 
phase  and  class  of  life.  And  as  no  living  person  can 
escape  their  power  and  influence  by  any  possible  effort, 
so  every  individual  is  affected  in  his  fortunes,  his  busi- 
ness, his  enjoyments,  his  life,  and  even  his  death,  by  the 
good  or  bad  management  of  these  mighty  forces,  and  the 
true  or  false  principles  controlling  them.  It  is  there- 
fore the  right,  as  it  is  the  duty,  of  every  patriotic 
citizen  to  use  all  means  in  his  power  to  make  this  most 
potent  force  of  modern  civilization  a  minister  of  good 
to  all  the  people,  and  not  an  instrument  of  oppression, 
or  of  the  personal  aggrandizement  of  a  few  at  tlie  ex- 
pense of  many." 

Hon.  Thomas  M.  Patterson,  discussing  the  Panama 
Canal  Bill  in  the  Senate,  said :  "  Next  to  education, 
transportation  is  the  burning  question  with  the  people 
of  the  United  States,  and  it  is  as  great  a  factor  in  the 
civilization  of  the  country,  and  its  permanent  advance- 
ment and  prosperity,  as  is  education  itself." 

142 


MONOPOLIES    AND    THE    GOVERNMENT 

The  railway  managements  of  the  nation,  in  private 
hands,  may  defeat  the  mihtary  operations  of  the  Gov- 
ernment in  case  of  war,  civil  or  foreign.  The  Govern- 
ment could  indeed  take  charge  of  the  roads  as  a  war 
measure  without  owning  them,  but  it  would  be  entirely 
dependent  upon  the  will  of  the  management  for  the 
skilled  help  necessary  to  utilize  the  means  of  trans- 
portation. 

Railroads  belong  to  the  class  called  natural  mo- 
nopolies ;  that  is,  they  are  monopolies  by  virtue  of  their 
inherent  qualities.  The  property  owned  by  them  consti- 
tutes a  large  proportion  of  all  that  is  owned  in  the 
United  States.  Their  monopolistic  character  can  be 
plainly  seen  by  reference  to  their  chief  characteristics. 
These  are:  1.  The  occupancy  of  desirable  spots  or  lines 
of  land.  2.  Power  to  increase  the  service  which  they 
supply  without  a  corresponding  increase  of  capital.  3. 
Power  to  compel  the  use  of  the  plant  which  they  own  in 
supplying  the  service  to  the  exclusion  of  others. 

The  extent  to  which  the  great  lines  of  steam  rail- 
way are  favored  by  the  points  of  vantage  which  they 
have  secured  is  not  generally  appreciated.  Along  the 
greater  portion  of  the  line  there  is  ample  room  for  a 
number  of  tracks,  but  without  the  right  to  cross  moun- 
tains through  particular  passes,  and  to  build  between 
rivers  and  the  bases  of  mountains,  these  tracks  would 
be  worthless.  The  company  which  first  secures  these 
narrow  strips  of  land  holds  them  exclusively,  and  such 
holding  gives  them  an  exclusive  monopoly  on  the  traffic 
of  large  sections.  This  remark  applies  with  peculiar 
force  to  the  terminal  facilities.  Obsers^e  the  great  ad- 
vantage held  in  the  matter  of  terminals  by  the  New 
York  Central  in  New  York,  by  the  Pennsylvania  in 
Philadelphia,  Pittsburg,  Baltimore,  and  Washington ; 
by  the  Illinois  Central  in  Chicago,  and  by  the  Southern 
Pacific  in  Oakland,  opposite  San  Francisco. 

143 


BOSSISM    AND    MONOPOLY 

Not  only  are  the  railroads  an  indispensable  factor 
in  modern  commerce,  but  Government  cannot  perform  its 
functions  without  rapid  transportation.  Without  the 
railroad  mail  service  the  Post  Office  Department  would 
be  an  almost  useless  appendage.  The  assembling  of 
Congress  upon  short  notice  in  cases  of  public  danger, 
urgency,  and  necessity  would  be  either  very  costly  or 
impracticable. 

The  railroad  monopoly  makes  all  other  monopolies 
possible.  It  makes  special  legislation  and  corrupt  gov- 
ernment appear  to  be  regular.  Transportation  is  the 
one  great  factor  in  industrial  and  commercial  life.  If 
we  get  control  of  that  we  can  be  a  free  people  once  more. 

Closely  connected  with  the  new  menace  in  the  form 
of  a  complete  unification  of  railroads  and  financial  in- 
terests are  the  Standard  Oil  Company  and  Standard 
Oil,  the  syndicate,  and  outgrowth  from  it. 

The  Standard  Oil  Company  stands  at  the  head,  in 
point  of  magnitude  of  its  operations,  of  the  financial 
institutions  of  the  world.  Not  even  the  Bank  of  Eng- 
land equals  it  in  volume  of  business  or  money  value  of 
exchanges.  Its  capital  stock  of  $100,000,000  is  no 
measure  of  the  value  of  its  properties.  Its  shares  are 
of  the  par  value  of  $100,  but  sell  for  from  $650  to  $850 
per  share  according  to  the  condition  of  the  money  mar- 
ket. Very  few  shares  are  outstanding  on  the  exchanges, 
the  stock  being  closely  held.  John  D.  Rockefeller  is 
much  the  largest  holder  of  the  stock,  the  dividends  upon 
which  are  from  forty  to  sixty  per  cent  per  annum.  But 
that  is  but  a  mere  fraction  of  his  wealth,  estimated  at 
over  $500,000,000,  and  rapidly  increasing.  Associated 
with  him  are  a  group  of  others,  the  wealth  of  each  run- 
ning into  eight  and  nine  figures,  altogether  constituting 
a  close  syndicate  of  far  more  financial  power,  as  regards 
the  control  of  ready  money,  than  any  government  in 
the  world.      The   Standard   Oil   properties,   though  of 

144 


MONOPOLIES    AND    THE    GOVERNMENT 

vast  and  of  almost  incalculable  value,  constitute  only 
one  of  the  many  kinds  of  assets  of  the  syndicate. 
Among  the  institutions  controlled  by  it  is,  in  point  of 
magnitude  of  operations,  the  largest  national  bank  (the 
National  City  Bank)  on  the  American  continent,  and 
probably  in  the  world,  as  well  as  other  banks  in  New 
York  and  elsewhere ;  also  a  controlling  interest  in  72,740 
miles  of  railroad,  including  great  trunk  lines,  and 
through  such  control  influencing  the  policy  of  as  many 
more  miles ;  also  trust  companies,  street  railways,  and 
gas  and  electric  lighting  systems,  including  the  entire 
system  of  Greater  New  York.  This  syndicate  is  also 
represented  in  the  three  greatest  insurance  companies  in 
the  world,*  with  reserve  assets  aggregating  $1,200,000,- 
000  and  cash  surplus  aggregating  $200,000,000.  It 
can  boom  or  depress  the  stock  market  at  will,  and  can 
control  the  call,  as  well  as  the  time  rates  for  money 
borrowed  on  stocks.  It  could  bring  on  a  financial  panic 
within  twenty-four  hours  that  would  cause  a  thousand 
bankruptcies,  compel  an  issue  of  Government  bonds, 
and  paralyze  industry  in  all  civilized  nations.  All  this 
power  and  wealth  have  resulted  from  special  opportuni- 
ties offered  by  law,  and  discriminating  rates  given  by 
railroads,  skillfully  and  "unscrupulously  taken  advantage 
of,  and  suppression  of  hundreds  of  rival  enterprises, 
upon  the  ruins  of  which  this  colossal  structure  has  been 
erected.  In  it  all,  so  far  as  wrongdoing  is  attributable, 
the  railroads  are  the  guiltier,  because  without  their  abuse 
of  privilege  and  violation  of  the  laws  governing  com- 
mon carriers  the  results  would  not  have  been  possible. 
What  are  the  aspirations  of  Standard  Oil  (the  syndi- 
cate) can  only  be  conjectured.  As  to  its  powers,  we 
may  speak  with  some  assurance.  No  doubt  the  company 
proper  (the  oil-producing  and  refining  company  by  that 
name)  has  relentlessly  used  its  power  and  made  the  most 
of  its  opportunities  in  the  past  to  establish  its  monopoly. 

145 


BOSSISM    AND    MONOPOLY 

But  when  we  come  to  Standard  Oil,  the  syndicate  of 
financial  potentates,  we  are  dealing  with  a  different 
proposition.  No  one  can  more  desire  peace,  order,  and 
a  stable  government  than  a  possessor  of  great  wealth; 
and  the  members  of  that  syndicate  need  not  be  told  that 
when  they  weaken  the  Government,  under  whose  laws 
they  must  find  protection  in  their  possessions,  that  that 
moment  those  possessions  depreciate,  and  that  if  the 
Government  were  destroyed  much  value  would  disappear. 
But,  even  so,  that  can  no  longer  be  considered  a  free 
country  where  a  few  individuals  outside  the  Government 
have  the  power  to  dictate  its  fiscal  policies  and  restrain 
legislation  not  consistent  with  their  opinion  of  what  is 
due  to  themselves.  It  is  entirely  proper,  at  any  rate,  to 
take  a  brief  inventory  of  the  power  already  possessed 
by  the  Standard  syndicate  and  to  speculate  as  to  what 
its  accumulated  powers  will  be  in  the  near  future  in  case 
the  people  continue  inactive  with  reference  thereto. 

In  the  first  place,  by  reason  of  its  being  in  possession 
of  such  immense  cash  resources  and  stocks,  the  New  York 
Stock  Exchange  is  a  free  mart  for  the  nation's  traffic 
in  securities  only  by  leave  of  that  syndicate.  In  the 
second  place,  and  for  the  same  reason,  it  need  not  con- 
form its  operations  to  the  condition  of  the  United  States 
Treasury,  but  rather  the  reverse  is  true.  It  may  not 
be  unnaturally  asked  why  we  single  out  that  syndicate 
and  devote  so  much  space  to  it.  It  is  because  it  con- 
stitutes the  central  figure,  the  controlling  factor,  in  the 
abuses  of  railroad  monopoly,  having  the  power  to  prac- 
tically dominate  the  entire  railway  management  of  the 
country.  When  this  dominance  in  connection  with 
Standard's  strategic  relation  to  the  fiscal  affairs  of  the 
Federal  Government,  above  described,  is  considered,  and 
its  power  to  make  and  unmake  prices,  even  of  govern- 
ment credits,  to  close  the  doors  of  banks,  brokers'  of- 
fices, factories,  and  mints  of  coinage,  and  create  world- 

146 


MONOPOLIES    AND    THE    GOVERNMENT 

wide  panics,  it  is  little  wonder  that  the  Senate  hesi- 
tates to  oppose  its  will  by  the  enactment  of  legislation 
not  approved  by  the  vast  railway  interests  identified 
with  it. 

The  people  have  permitted  themselves  to  be  chloro- 
formed with  the  assurance  of  politicians  and  newspa- 
pers saying,  "  All  is  well,  there  is  no  danger ;  the  trusts 
and  syndicates  will  destroy  themselves."  And  now  it 
has  come  to  this,  that  a  President,  whose  duty  it  was  to 
fully  investigate  and  thoroughly  understand  the  dan- 
gers that  were  brewing,  has  been  controlled  by  party 
exigencies,  or  fooled  by  his  advisers,  until  evidence  was 
laid  before  him  by  private  agencies  of  such  conclusive 
and  overwhelming  character  that  he  was  startled  and 
aroused.  Even  then  he  was  unable  to  comprehend  the 
full  import  of  the  situation.  Although  the  constitu- 
tional limitations  that  "  do  hedge  about  "  the  presiden- 
tial office  and  Congress  have  been  declared  from  time  to 
time  by  the  Supreme  Court,  and  may  be  said  to  be 
fairly  well  defined  in  judicial  history,  the  President  ap- 
pears to  have  forgotten  them,  or  to  have  been  misled 
with  reference  to  them ;  for  we  find  him,  shortly  after 
his  recent  election,  making  the  most  extravagant  decla- 
rations of  war  against  monopoly,  and  especially  promis- 
ing remedies  for  railway  abuses.  Since  that  time  he 
has  had  two  kinds  of  advice:  one,  personally,  at  least, 
friendly ;  the  other,  thinly  veiled  with  menaces,  virtually 
a  threat.  From  friendly  sources  he  has  been  shown  how 
narrow  is  the  margin  of  power  lodged  in  the  hands  of 
Congress  and  the  Executive,  in  the  light  of  Supreme 
Court  decisions.  From  the  other  source  he  has  been 
"  advised "  as  to  what  will  happen  to  him  and  the 
country  if  he  or  Congress  attempt  to  exercise  the  little 
power  that  they  have.  Now,  if  he  exercises  the  moral 
courage  attributed  to  him  by  his  effusive  admirers,  he 
will  confess  his  mistakes  and  frankly  inform  the  people 

147 


BOSS  ISM    AND    MONOPOLY 

as  to  the  true  situation.  He  will  advise  them  of  the 
necessity  for  amendments  to  the  Constitution,  for  the 
control  of  industrial  monopolies,  and  that  there  are  two 
ways  to  accomplish  it;  that  the  one  method  is  not 
available,  owing  to  the  refusal  of  the  Senate  to  submit 
adequate  amendments,  and  that  the  other  requires  the 
people  to  take  the  initiatory  step  in  their  respective  State 
Legislatures,  to  culminate  in  the  assembling  of  a  con- 
vention, and  that  for  railroad  combination  the  true 
remedy  is  government  ownership. 

John  D.  Rockefeller  is  now  by  far  the  wealthiest 
man  in  America  and  is  reputed  to  be  the  richest  in  the 
world.  Andrew  Carnegie,  before  his  many  princely 
gifts  were  made,  was  said  to  possess  values  of  $350,- 
000,000.  Between  him  and  Mr.  Rockefeller  there  is  a 
little  gap  of  about  $200,000,000,  the  difference  being 
in  favor  of  the  latter.  Mr.  Rockefeller's  income  is,  of 
course,  not  alone  from  Standard  Oil  stock,  but  from  in- 
vestments made  by  him  in  other  gilt-edged  securities,  and 
is  now  said  to  amount  to  $50,000,000  a  year.  His 
wealth  and  its  history  is  that  of  other  men  in  the 
Standard  Oil  group.  Some  of  them,  recently  estimated 
by  an  eminent  Wall  Street  broker,  are  as  follows: 

William  Rockefeller  $75,000,000 

Hem-y  H.  Rogers 50,000,000 

J.  D.  Archibald 40,000,000 

H.  M.  Flagler 40,000,000 

Omitting  the  Lockart  estate,  estimated  at  $150- 
000,000,  here  is  an  aggregate,  mostly  of  cash  and  as- 
sets, quickly  convertible  into  cash,  of  $755,000,000. 
Other  Standard  Oil  interests  and  those  in  corporations 
entirely  subordinate  to  Standard  Oil,  which  in  its  turn 
is  absolutely  under  the  control  of  the  gi'oup,  added  to 
the  above  sum,  will  easily  bring  it  up  to  $1,000,000,000. 

Now,  having  before  us  the  head,  or  inner  circle, 
148 


MONOPOLIES    AND    THE    GOVERNMENT 

of  the  power  over  us  all,  with  Its  nest  egg  of  a  round 
billion,  we  are  ready  to  give  attention  to  its  branches 
and  ramifications.  For  present  purposes,  we  may  drop 
the  institution  which  produces  and  supplies  illuminating, 
lubricating,  etc.,  oil,  and  other  by-products,  to  the  hu- 
man race.  To  designate  and  distinguish  the  new  empire 
within  and  over  the  Republic,  sometimes  designated  as  a 
"  community  of  interest,"  and  otherwise  as  the  "  sys- 
tem," we  use  the  term  "  The  Kingdom  of  High 
Finance,"  and  sometimes  simply  "  The  Kingdom."  It 
is  more  expressive  and  there  is  little  danger  of  confusion 
of  terms. 

Any  treatise  on  politico-railroad  despotism  must 
necessarily  devote  more  or  less  space  to  John  D.  Rocke- 
feller, its  king  and  most  important  personage,  just  as 
an  account  of  that  dramatization  of  government  on  the 
outside  called  the  United  States,  must  frequently  men- 
tion its  stage  manager,  the  President.  The  man  who  or- 
ganized and  conducted  to  success  the  greatest  unofficial 
single  corporate  entity  in  the  world,  overcoming  diffi- 
culties which  would  have  vanquished  any  but  the  most 
patient,  industrious,  prudent,  and  farsighted,  who  held 
firmly  a  controlling  interest  through  all  vicissitudes,  and 
who  so  wisely  managed  and  invested  his  profits  as  to 
become  by  far  the  richest  man  of  his  day  and  genera- 
tion, is  not  to  be  lightly  considered  as  a  moral  and 
mental  force  in  The  Kingdom  of  High  Finance.  And 
yet  truth  compels  the  statement  that  the  kingship  of 
Rockefeller  is  upheld  as  much  by  the  fact  of  his  large 
possessions  as  by  reason  of  his  capacity  to  govern.  He 
acts  for  the  most  part  through  his  cabinet,  small  and 
select,  at  Standard's  fortress  in  New  York.  But  his 
kingdom  is  the  whole  world  of  transportation  and 
finance,  of  which  Wall  Street  is  the  center  and  capital, 
a  city  within  a  city.  Perhaps  he  directly  supervises 
nothing  except  his  private  landed  estates  and  deposit 

149 


BOSSISM    AND    MONOPOLY 

accounts,  unless  called  upon  to  give  advice.  And  yet 
no  financial  deal  of  considerable  magnitude  involving 
railway  or  industrial  stocks  or  bonds,  or  a  large  transfer 
of  cash  banking  assets,  is  consummated  until  it  has  been 
submitted  to  his  cabinet.  Perhaps  less  than  ten  per  cent 
of  such  submissions  ever  reach  the  king,  because  his 
chief  advisers  and  old  trusted  associates  hold  from  him 
an  unlimited  power  of  attorney.  It  is  only  when  they 
are  beset  with  doubts  as  to  the  wisdom  of  sanctioning 
or  disapproving  a  proposition  of  considerable  impor- 
tance, or  when  their  views  are  not  in  accord,  which  hap- 
pens with  equal  infrequency  that  his  kingship  is  con- 
sulted. It  is  rarely  the  case  that  any  outside  matter  of 
a  business  nature  not  immediately  affecting  the  oil  in- 
dustry comes  before  him  otherwise  than  through  his 
cabinet.  And  yet  the  decrees  of  the  cabinet  are  pro- 
nounced upon  matters  submitted  to  it  as  decrees  of  the 
king  in  person. 

The  dynasty  rules  more  by  negation  than  by  interfer- 
ence, by  fear  than  by  love,  by  indirection  than  by  actual 
contact.  And  yet  it  would  be  a  great  mistake  to  sup- 
pose that  its  yoke  always  galls  the  necks  of  its  wearers. 
Notwithstanding  many  worthy  exceptions,  the  vast  ma- 
jority of  mankind  love  to  be  bossed.  No  one  will  ques- 
tion that  this  is  so  in  politics;  it  has  become  largely  so 
in  ordinary  business,  and  is  especially  true  in  high 
finance.  Civilization,  industry,  and  finance  are  so  inter- 
dependent and  complicated  that  most  men  are  glad  of 
an  opportunity  which  such  a  system  affords  of  shifting 
the  responsibility  and  shirking  the  labor  of  making  up 
their  minds.  This  applies  in  some  degree  to  the  grand 
dukes  and  marquises  in  this  kingdom,  such  as  Harriman, 
Gould,  Morgan,  and  the  present  generation  of  Vander- 
bilts,  as  well  as  to  the  royalty  of  lesser  rank. 

But  it  is  not  to  be  inferred  from  what  immediately 
precedes  that  the  power  of  the  king  and  his  cabinet  is 

150 


MONOPOLIES    AND    THE    GOVERNMENT 

only  theoretical  or  consists  in  mere  assumption.  Sup- 
pose, for  instance,  when  Kuhn,  Loeb  &  Co.  were  about 
to  have  underwritten  $160,000,000  of  Southern  Pacific 
refunding  bonds,  the  king  had  seen  fit  to  disapprove. 
There  is  in  his  realms  not  only  a  market  for  securities, 
but  a  money  market.  With  the  fifty  millions  or  more 
of  cash  coming  under  Standard  Oil's  immediate  control 
in  a  single  month,  with  twenty  times  as  much  more  de- 
posited by  the  public  and  by  corporations  in  banks  and 
trust  compariies  controlled  by  Standard,  a  few  messages 
over  telephones  and  a  few  short  dispatches  to  institu- 
tions in  other  cities  where  the  kingdom's  banks  are 
located  would  have  locked  up  the  money  market  so 
tightly  that  the  underwriters  would  have  been  running 
to  26  Broadway  with  profuse  apologies  for  even  enter- 
taining the  underwriting  proposition  for  a  moment. 
And  yet  it  is  not  known  to  the  public  that  Standard 
holds  a  share  of  Southern  Pacific  stock  or  any  of  its 
bonds. 

A  conservative  New  York  daily  paper  recently  gave 
the  following  estimate  of  the  market  value  of  the  hold- 
ings of  the  Standard  Oil  associates: 

Bank  stocks $233,102,500 

Industrial  stocks 1,888,248,235 

Railroad  stocks 5,094,518,255 

Other  stocks   2,000,000,000 

Bank  deposits 419,868,342 

Dividend  profits  and  surplus 100,000,000 

Total $9,734,638,332 

And  all  this  enormous  wealth  is  concrete;  that  is  to 
say,  it  consists  of  cash  credits  and  gilt-edge  securities 
quickly  convertible  into  money.  The  "  system,"  as  Law- 
son  calls  it,  understands  the  advantage  of  the  bond  and 
the  stock  certificate  over  the  corpus  of  the  property  rep- 
11  151 


BOSSISM    AND    MONOPOLY 

resented  by  them.  The  possession  by  the  syndicate  of 
the  stock  gives  it  dictatorial  power  over  the  directorate 
and  managers,  so  that  they  must  serve  and  strive  to 
please  the  syndicate  by  constantly  increasing  the  volume 
of  traffic  and  maintain  high  rates,  even  to  the  extent 
that  the  traffic  will  bear.  The  monetary  channels  from 
the  pockets  of  the  people  to  the  vaults  of  the  syndicate 
must  be  kept  bank  full,  else  official  heads  are  in  peril. 
And  this  applies  not  only  to  lesser  lights,  but  to  such  as 
Harriman,  Gould,  Hill,  even  to  Morgan.  For  The 
Kingdom  of  High  Finance  is  not  unlike  other  kingdoms, 
where  one  man  is  ever  the  supreme  source  of  "  honor  and 
profit."  Once  it  was  Jay  Gould,  then  Vanderbilt,  then 
Morgan.  Now  all  is  changed,  and  it  is  a  syndicate,  at 
the  head  of  which  is  by  far  the  wealthiest  man  the 
world  has  ever  seen.  Such  is  the  syndicate's  power  over 
the  railroads  of  the  country.  Of  course  it  holds  a  ma- 
jority of  stock  in  but  few  railway  systems,  but  that 
is  not  necessary.  Indeed,  the  will  of  the  syndicate  car- 
ries the  authority  of  law  in  railroad  management  where 
it  has  not  a  dollar  of  interest.  This  ought  to  be  easily 
comprehended  when  the  extent  and  character  of  its 
financial  resources  are  studied.  Among  its  holdings  ap- 
pearing above  are  bank  stocks  to  an  enormous  amount, 
bv  far  more  than  are  concentrated  under  any  other  con- 
trol. Standard  has  been  wise  in  its  bank-stock  invest- 
ments, as  in  others.  Its  holdings  are  in  the  largest  and 
most  solvent  money-lending  and  credit-giving  banks  in 
the  country — those  that  must  be  called  upon  to  finance, 
that  is  to  have  charge  of,  the  underwriting  of  all  large 
monetary  transactions  of  railroad  companies.  Now  the 
deposit  accounts  of  Standard  are  of  considerable  im- 
portance, even  when  distributed  among  all  these  banks. 
That  fact,  added  to  the  fact  that  it  is  a  large  stock- 
holder, plus  its  general  control  of  the  securities  market, 
gives  it  dominating  influence  in  most  of  the  banks  of 

152 


MONOPOLIES    AND    THE    GOVERNMENT 

large  account  and  of  issue  in  the  country.  All  railway 
managements  are  such  that  the  managers  never  know 
when  or  how  soon  it  may  become  necessary  to  float  a 
bond  issue  and  have  the  bonds  underwritten  by  a  syndi- 
cate to  avoid  their  being  placed  at  a  heavy  discount. 
Or  some  new  connection  or  terminal  necessity  or  improve- 
ment may  justify  a  new  issue  of  stock.  In  any  such  case 
the  difference  between  approval  and  objection  by  The 
Kingdom  to  financial  aid  from  the  banks  able  to  extend 
it,  is  the  difference  between  success  and  failure.  For 
these  reasons  that  syndicate  can  do  just  about  what  it 
pleases  with  any  railroad  or  bank  in  the  country,  whether 
it  be  a  shareholder  or  not.  And  Standard,  being  thus 
in  control  of  transportation  and  credit — those  factors 
which  make  any  large  enterprise  possible — no  manufac- 
turing concern  dares  do  a  single  act  positively  inimical 
to  its  interest  or  policy. 

The  king  and  his  cabinet  find  the  governmental  ma- 
chinery at  Washington  and  Albany  useful  annexes.  The 
President  at  the  head  of  the  army  and  navy  is  certainly 
a  convenient  institution,  in  fact  well-nigh  indispensable 
in  their  scheme  of  orderly  and  submissive  government. 
But  when  it  comes  to  fiscal  affairs,  what  care  they  for 
the  President? 

The  presidential  office,  once  much  respected  for  the 
power  it  exerted  upon  the  current  events  and  affairs  of 
the  nation,  is  respected  no  more  for  that  reason.  The 
President  may  declaim  and  talk  and  threaten  and 
flourish  as  big  a  stick  as  he  can  wield,  without  provok- 
ing so  much  as  a  passing  comment  from  the  superior 
powers  that  "  do  hedge  liim  about."  For  instance,  there 
is  the  Senate,  an  outlying  impregnable  Gibraltar  of  The 
Kingdom.  (The  people  may,  howsoever,  take  it  into 
their  heads  to  prove  that  it  is  only  a  Port  Arthur.) 
The  people  only  vote  indirectly  for  President;  they  do 
not  vote  at  all  for  senators.     The  really  influential  sena- 

153 


BOSSISM    AND    MONOPOLY 

tors  are  nominated  by  the  Standard  king  through  cer- 
tain State  agencies  locally  known  as  party  bosses,  but 
known  by  the  king  as  presidents  and  attorneys  for  rail- 
road companies  within  Standard's  systems.  As  for  their 
being  elected,  that  is  a  joke.  They  are  voted  for,  it  is 
true,  but  an  election  implies  an  exercise  of  the  free, 
untrammeled  will ;  and  that  is  not  exercised  where  the 
legislator  voting  for  a  senator  has  to  consult  a  Standard 
agent  before  being  even  nominated.  The  voters  may 
very  soon  take  it  into  their  heads  to  insist  upon  the 
enactment  of  compulsory  primary  election  laws  of  the 
Wisconsin  and  Illinois  style,  and  on  having  their  own 
representatives  vote  for  senators.  If  they  do  this,  and 
make  the  most  of  the  advantage  thus  gained.  The  King- 
dom will  soon  be  overthrown,  because  only  the  Senate 
stands  in  the  way  of  government  ownership  of  that  upon 
which  The  Kingdom  stands. 

A  full  and  free  criticism  upon  the  shortcomings  of 
government  and  an  intimation  that  ours  is  the  worst 
governed  country  on  the  earth,  if  made  publicly,  would 
win  for  the  critic  the  title  of  sorehead  and  crank,  or 
might  involve  him  in  serious  trouble.  While  we  are  not 
quite  Russianized,  it  cannot  be  denied  that  we  are  drift- 
ing to  the  bad  conditions  prevailing  in  the  domains  of 
the  Czar.  In  the  first  place,  our  Federal  Government  is 
not  a  democracy,  as  is  generally  supposed,  either  in 
form  or  practice.  We  speak  of  Great  Britain  as  a  modi- 
fied monarchy.  We  may  properly  speak  of  our  Govern- 
ment as  a  qualified  democracy ;  but  the  modification  in 
England  is  effective  to  give  effect  to  popular  represen- 
tation and  public  opinion,  while  in  the  United  States 
the  checks  upon  the  will  of  the  people  are  so  important 
and  far-reaching  in  effect  that,  without  any  flagrant 
perversion  of  the  Constitution,  our  Government  has 
really  changed  from  a  representative  government  to  a 
plutocracy.      Instead   of  our   Constitution    affording   a 

15  i 


MONOPOLIES    AND    THE    GOVERNMENT 

safeguard  against  the  latter,  it  really  furnishes  the 
framework  for  it.  It  provides  a  Senate,  with  absolute 
veto  on  all  legislation,  and  places  it  beyond  the  reach  of 
the  people.  True,  if  it  should  ever  happen  in  any  bien- 
nial period  that  all  the  States  chose  honest  Legislatures, 
the  members  of  which  were  proof  against  temptation, 
the  people  might  in  an  indirect  way  change  one-third 
of  the  plutocratic  body ;  but  that  would  not  alter  its 
character  as  an  element  in  the  Government  possessing 
and  exercising  absolute  power.  In  practice  the  people 
must  vote,  if  they  vote  at  all,  for  corporate  agents 
selected  by  party  bosses,  and  the  electorate  then  becomes 
oblivious  to  the  personnel  and  environment  of  the  one 
selected  for  senator,  or  failing  to  understand,  or  relying 
upon  the  infallibility  of  party,  assume  that  all  is  well 
and  that  the  person  chosen  is  all  that  he  asserts  himself 
to  be.  The  senator  chosen,  though  upon  taking  his  seat 
well  disposed,  soon  has  clearly  revealed  to  him  the  path 
of  political  safety  on  the  one  hand  and  of  destruction 
on  the  other.  He  has  only  to  study  the  record  and  con- 
template the  fate  that  has  overtaken  those  senators  who, 
going  into  the  Senate  with  high  resolves,  have  followed 
the  dictates  of  conscience  and  battled  for  the  right 
against  the  ever-present  and  dominating  power  that  has 
its  seat  not  at  Washington,  but  in  Wall  Street.  Espe- 
cially does  he  read  his  doom  in  opposition  to,  and  his 
reelection  in  alignment  with,  that  power  if  he  belongs 
to  the  dominant  party.  Here  the  curse  of  party  rule  is 
seen  in  its  darkest  aspects.  Often  have  senators  opposed 
in  speech  confessedly  bad  measures  programmed  for 
passage  by  the  party  bosses,  and  yet  have  fallen  down 
under  the  party  lash  and  voted  for  them.  Herein  is 
seen  in  bold  relief  the  destructive  tendency  of  govern- 
ment by  party  rule  under  the  present  Constitution.  The 
only  difference  between  the  Government  of  Russia  and 
that  of  the  United  States  is  that  there  the  despot  openly 

155 


BOSSISM    AND    MONOPOLY 

and  officially  occupies  the  throne,  upon  which  a  fierce 
light  is  ever  shed ;  while  here  the  czar  is  unseen,  uniden- 
tified, and  iiTesponsible,  acting  in  the  dark  through  a 
collective  official  organism,  the  one  no  more  reflecting  the 
will  and  conserving  the  interests  of  the  people  than  the 
other. 

Others  also  see  that  a  crisis  has  come,  and  that  there 
is  before  the  people  of  this  country  a  railroad  question 
which  transcends  in  importance  all  others.  Thus,  H.  C. 
Nicholas,  in  Public  Opinion  of  March  4,  1905,  said: 
"  Never  before  in  the  history  of  the  world  has  a  small 
handful  of  men  controlled  the  enormous  resources  and 
the  tremendous  power  that  is  centered  in  the  hands  of 
the  ten  men  who  control  the  railroad  industry  of  the 
United  States.  Whether  or  not  any  ten  men,  however 
honorable  they  may  be  and  however  noble  may  be  their 
aims,  should  be  permitted  to  control  the  railroad  indus- 
try of  the  country,  with  its  power  of  taxing  every  in- 
dustry and  entering  into  the  cost  of  practically  every 
commodity  of  commerce,  is  another  and  far  greater 
question  which  this  country  will  soon  be  called  upon 
to  solve." 

And  to  show  that  the  facts  stated,  conclusions  drawn, 
and  fears  expressed  herein  are  not  merely  those  of  one 
or  more  alarmists,  we  quote  the  closing  paragraph  of 
a  recent  editorial  in  the  Wall  Street  Journal,  bearing 
upon  the  concentration  of  capital  and  growth  of  com- 
binations and  trusts,  as  follows :  "  It  would  seem  at  first 
glance  that  a  republican  form  of  government  like  ours 
would  be  unfavorable  for  an  economic  evolution  of  this 
character.  But,  as  a  matter  of  fact,  nowhere  else  has 
there  been  such  concentration  of  capital  as  in  the  United 
States.  Nowhere  else,  it  may  be  said,  does  it  involve 
so  much  of  grave  peril  as  in  this  country,  for  it  raises 
the  question  whether  free  government  may  not  break 
down  under  the  burden  of  financial  power  aggregated 

156 


MONOPOLIES    AND    THE    GOVERNMENT 

in  a  few  hands.  It  is  just  this  consideration  which  is 
responsible  for  the  prevailing  unrest  and  discontent." 
And  Governor  La  Follette  coincides  with  the  general 
opinion.  He  says :  "  There  is  no  competition  to  restrict 
railroads  in  any  degree.  Consolidation  has  completely 
destroyed  all  competition  in  rate-making."  He  sees  the 
complete  empire  of  railroad  consolidation,  but  he  ap- 
pears reluctant  to  admit  its  true  significance.  He  says : 
"  We  come  now  to  the  great  master  stroke  for  absolute 
control  of  the  highways  of  commerce  and  trade  by  the 
consolidations  of  the  railroads  of  the  country  under 
what  is  called  the  '  community  of  interest '  plan.  Under 
this  plan  practically  the  entire  vital  railroad  mileage  of 
the  country  has  passed  under  the  control  of  groups  (six) 
of  financiers,  each  group,  in  large  measure,  controlled 
by  one  man.  The  effect  upon  railway  interests  and  the 
public  has  been  tremendous."  And,  after  giving  a  table 
of  names  and  figures  in  support  of  this  statement,  he 
adds :  "  The  disclosures  of  this  statement  are  positively 
startling."  Indeed,  they  are  startling — so  startling  as 
to  show  that  we  are  now  "  at  the  parting  of  the  ways." 
The  latest  report  of  the  Interstate  Commerce  Commis- 
sion proves  this  conclusively.  In  it  the  commissioners 
all  unite  in  saying :  "  The  tendency  to  combine  con- 
tinues to  be  the  most  significant  feature  of  railroad 
developments.  The  facts  in  this  regard  are  matters  of 
common  knowledge,  and  little  is  gained  by  the  mention 
of  particular  instances.  It  is  not  open  to  question  that 
the  competition  between  railroad  carriers  which  for- 
merly prevailed  has  been  largely  suppressed,  or  at  least 
brought  to  the  condition  of  effective  restraint.  The 
progress  of  consolidation,  in  one  form  or  another,  will 
at  no  distant  day  confine  this  competition  within  narrow 
and  unimportant  limits,  because  the  control  of  most  rail- 
way properties  will  be  merged  in  a  few  individuals, 
whose  common  interests  impel  them  to  act  in  concert." 

157 


BOSS  ISM    AND    MONOPOLY 

The  "  community  of  interest  "  plan,  put  in  execution 
since  that  report  was  pubhshed,  had  the  effect  of  Hnking 
together  the  great  systems  then  referred  to  as  the  prod- 
ucts of  consoHdations  and  mergers,  until  to-day  compe- 
tition between  the  two  oceans  bounding  the  country  east 
and  west  has  disappeared.  This  "  community  of  inter- 
est "  must  be  overthrown,  or  our  boast  of  freedom  is 
idle  and  vain.  All  not  identified  in  some  way  with  this 
"  community  of  interest,"  and  who  have  given  the  sub- 
ject judicious  thought,  agree  in  this.  They  must  also 
agree  that  a  false  step  in  attempting  its  overthrow  will 
be  of  most  serious  consequence.  The  groupings  of  the 
combinations  constituting  the  "  community  of  interest  " 
and  the  data  as  to  each  are  stated  somewhat  differently 
by  different  writers ;  but  that  given  by  Governor  La  Fol- 
lette  is  the  latest  and  no  doubt  the  most  trustworthy. 
It  is  as  follows: 


Classifications  of  the 
Various  Systems. 

Number  of 
roads  em- 
braced. 

Mileage  of 
each  system. 

Capitalization 
of  each  system. 

Vanderbilt 

132 
280 
225 
109 
85 
9 

21,888 
19,300 
47,206 
28,157 
22,943 
25,092 

$1,169,169,132 

Pennsylvania 

Morgan-Hill 

1,822,402,235 
2,625,116,359 

Gould -Rockefeller .... 
Harriman-Kuhn-Loeb 
Morse -Leeds 

1,368,977,540 
1,321,243,711 
1,059,250,939 

Total 

840 

164,586 

$9,006,086,916 

The  indications  point  to  an  early  consolidation  of 
all  of  the  Pacific  railroads.  The  Union  Pacific  owns 
45.5  per  cent  of  the  stock  of  the  Southern  Pacific 
and  Central  Pacific  and  many  other  companies,  having 
a  total  mileage  of  8,809  miles.  The  Oregon  Short 
Line,  a  company  subordinate  to  the  Union  Pacific,  holds 

158 


MONOPOLIES    AND    THE    GOVERNMENT 

$82,491,087  of  the  $364,867,849  capital  stock  of  the 
Northern  Securities,  which  holds  large  interests  of  the 
Northern  Pacific  Railway  Company.  In  May,  1901, 
$78,108,000,  being  more  than  fifty  per  cent  of  the  capi- 
tal stock  of  the  Northern  Pacific  Railway  Company, 
was  acquired  in  the  interest  of  the  Union  Pacific  Com- 
pany. Subsequently,  according  to  Associated  Press  re- 
port, the  parties  in  control  of  the  Northern  Pacific  and 
Great  Northern,  on  the  one  part,  and  of  the  Union 
Pacific  on  the  other,  came  to  a  complete  understanding 
and  settlement,  and  by  written  contract  jointly  under- 
took the  construction  of  a  connecting  line  between  the 
respective  systems.  It  surely  cannot  be  unknown  to  the 
public  that  when  the  passenger  goes  from  New  York 
to  Chicago,  or  from  Cliicago  to  San  Francisco,  or  from 
any  city  to  another,  the  fare  will  be  just  the  same — 
and  high  at  that — ^whether  he  go  by  one  railway  or 
another.  It  is  just  the  same  with  the  shipping  of 
freight;  nor  does  this  result  from  accident. 

As  a  matter  of  fact  the  Rockefeller  or  Standard 
Oil  syndicate  controls,  directly  or  indirectly,  every  im- 
portant railroad  system  in  the  country.  As  for  anyone 
quarreling  with  John  D.  Rockefeller  or  his  cabinet,  one 
might  as  well  imagine  the  English  stock  broker  quar- 
reling with  the  Rothschilds  or  with  King  Edward.  Not 
only  would  Harriman,  Gould,  Hill,  Belmont,  Armour, 
Morgan,  or  the  Speyers  not  dare  to  quarrel  with  Stand- 
ard Oil,  but  they  would  not  dare  to  quarrel  with  each 
other,  though  they  sometimes  pretend  to  do  so  for  stock- 
jobbing purposes.  But  it  is  nearly  always  a  mere  bluff 
to  fool  the  people  into  buying  some  stock  which  has  be- 
come a  drug  on  somebody's  hands,  or  selling  to  the 
members  of  the  syndicate  outstanding  shares  needed  by 
some  one  to  give  him  more  secure  control  of  a  corpora- 
tion. Every  little  skimiish  between  two  systems  is  fol- 
lowed by  a  closer  union. 

159 


BOSSISM    AND    MONOPOLY 

It  is  not  possible  to  go  into  details  to  show  how  the 
"  community  of  interest  "  is  maintained,  owing  to  lack 
of  exact  knowledge.  But  what  has  been  accomplished, 
and  by  whom,  as  principal  actors,  and  some  of  their 
most  important  relations  to  each  other  have  come  to  the 
surface  from  time  to  time,  all  together  constituting  a 
mass  of  public  information  from  which  the  most  im- 
portant deductions  may  be  made.  The  ruling  power 
of  which  we  speak  is  not  a  corporation,  nor  a  club,  nor 
an  organized  association  of  any  kind.  But  between  men 
whose  interests  are  the  same  and  whose  endea'Cors  are 
directed  along  the  same  channel  no  definite  agreement  is 
necessary.  They  may  come  and  go  and  meet  in  twos 
and  three,  or  tens,  so  long  as  their  interests  do  not  con- 
flict. And  where  such  great  interests  are  involved  con- 
flicts would  be  of  such  serious  results  that  a  way  is 
invariably  found  to  compromise  them  and  preserve  at 
least  a  workable  state  of  peace. 

The  writer  was  slow  to  believe  that  the  coterie  of 
capitalists  designated  as  Standard  Oil,  or  the  Standard 
Oil  crowd,  or  the  Rockefeller  interests,  was  as  important 
in  the  colossal  scheme  of  financing  the  Republic  as  was 
alleged  by  various  writers  in  magazines  and  newspapers, 
and  even  in  prints  of  a  more  permanent  character.  But 
a  study  of  all  that  has  come  to  public  view  in  the  last 
few  years  and  of  the  history  of  the  Standard  Oil  cor- 
poration proper  in  connection  with  contemporary,  cor- 
porate, and  financial  history,  leaves  room  for  but  one 
opinion,  and  that  is  that  the  head,  the  central  figure  in 
the  combination,  is  the  Standard  Oil  group. 

In  his  inaugural  address  the  President  emphasized 
the  necessity  of  constant  preparedness  for  war  with  for- 
eign nations.  In  constantly  seeking  to  inspire  people 
with  a  love  of  military  greatness  he  is  but  diverting 
their  minds  from  the  supreme  danger.  The  gravest 
menace  to  the  Republic  is  from  within.     No  menace  to 

160 


MONOPOLIES    AND    THE    GOVERNMENT 

be  found  in  the  military  resources  of  any  foreign  nation, 
or  in  all  together,  is  to  be  compared  to  that  we  are  here 
attempting  to  describe.  How  trifling  are  all  the  dan- 
gers from  abroad  conjured  up  in  the  President's  mind 
in  comparison  with  our  domestic  peril,  due  to  the  pres- 
ence and  power  of  The  Kingdom  of  High  Finance.  The 
President  will  no  doubt  inform  Congress  and  the  country 
of  the  true  state  of  the  Union  and  point  out  the  real 
source  of  danger  when  he  has  been  more  fully  informed. 

One  branch  of  the  syndicate  goes  from  city  to  city 
swallowing  up  and  combining  all  the  street  railways, 
gas  plants,  and  electric-lighting  companies.  The  syn- 
dicate has  now  so  far  completed  its  work  along  this  line 
that  the  people  have  ceased  to  be  frightened  at  its 
accomplishments,  accept  them  as  the  normal  order,  and 
submit  to  be  ruled  and  fleeced  by  the  gigantic  consolida- 
tions as  they  submit  to  the  growing  importance  and 
power  of  the  political  boss. 

The  "  Beef  Trust  "  will  soon  surrender  to  The  King- 
dom. The  king's  cohorts  have  obtained  control  of  the 
Chicago  Stock  Yards  and  will  procure  the  necessary 
legislation. 

Standard  Oil  (syndicate),  the  central  group  in  the 
financial  oligarchy,  is  essentially  a  transportation  trust. 
The  opportunity  for  its  consummation  did  not  present 
itself  until  (1)  the  railroads  had  obtained  complete 
political  control  and  (2)  there  was  a  large  balance  of 
the  country's  surplus  cash  and  cash  credits  in  the  banks 
in  Wall  Street.  The  legislative  department  is  prac- 
tically controlled  from  Standard's  fortress,  while  the 
Supreme  Court,  still  sitting  at  Washington,  is  a  for- 
eign but  friendly  power,  whoso  decrees  are  respected  or 
scorned,  according  to  circumstances.  The  only  hope  for 
the  rescue  of  our  institutions  from  this  awful  predica- 
ment is  the  chance  that  the  people  will  wake  up,  realize 
true  conditions,  and  take  action. 

161 


BOSSISM    AND    MONOPOLY 

Judge  Peter  S.  Grosscup,  writing  for  McClure's 
Magazine  for  February,  1905,  very  strikingly  expresses 
the  same  idea  in  these  words:  "  In  1900  it  was  estimated 
by  the  Government  that  an  equal  distribution  of  the 
wealth  of  the  United  States  among  its  people  in  1880 
would  have  yielded  to  each  about  one  thousand  dollars, 
while  such  distribution  in  1900  would  have  yielded  about 
eleven  hundred  dollars.  The  growth  of  wealth  per 
capita,  therefore,  during  these  two  decades  was  about 
ten  per  cent.  Now  mark !  During  this  same  period 
the  amounts  invested  by  our  wage-workers  and  people 
of  ordinary  means  in  bank  deposits — that  is,  the  amount 
withheld  or  withdrawn  by  them  from  active  proprietor- 
ship and  left  with  banking  institutions  to  loan  out  to 
those  skilled  in  the  ways  of  corporations — have  grown 
over  five  hundred  per  cent." 

The  Kingdom  not  only  carries  the  commerce  of  this 
country,  but  controls  it,  determines  its  destination  and 
for  what  price  it  shall  be  sold,  where  the  markets  for  it 
shall  be  located  and  who  shall  control  them.  Capital 
and  labor,  wherever  employed  in  the  creation  of  wealth, 
are  absolutely  dependent  upon  transportation,  and  this 
is  controlled,  in  fact  much  of  it  is  owned,  by  The 
Kingdom. 

What  is  to  be  the  ultimate  fate  of  a  people  when 
the  small  business  man,  the  wage-worker,  the  producer 
and  consumer  are  subordinate  to  the  will  of  such  a  gov- 
ernment as  The  Kingdom  gives  them  or  permits  them  to 
have.''  Is  anyone  a  free  man  who  lives  in  a  community 
where  his  conduct  with  respect  to  what  he  buys  and  sells, 
for  whom  he  works  and  for  what,  are  subject  to  laws 
and  rules  not  found  in  the  statute  books,  and  in  the 
making  of  which  he  has  had  no  voice.'' 

As  matters  now  stand,  and  owing  to  the  tendency 
of  bank  deposits  to  flow  to  the  centers  of  speculation 
and  corporate  flotation,  the  power  of  The  Kingdom  is 

162 


MONOPOLIES    AND    THE    GOVERNMENT 

only  limited  to  the  ability  of  the  banks  controlled  by 
it  to  increase  bank  deposits  and  expand  bank  credits. 

The  same  idea  is  abstractly  but  very  properly  ex- 
pressed by  Judge  Grosscup,  in  the  article  above  quoted 
from,  as  follows :  "  Indeed,  the  chief  reason  why  any 
monopoly  can  now  maintain  itself  is  that,  besides  hav- 
ing a  grasp  on  all  the  physical  sources  of  productivity 
within  a  given  field,  it  has  a  large  grasp  also  on  all  the 
financial  resources  that  would  otherwise  go  into  the 
building  up  of  competitors." 

Look  at  the  directorate  of  the  Equitable  Life  As- 
sociation. There  you  find  most  of  the  great  bankers, 
presidents  of  trust  companies  and  railroads,  organizers, 
attorneys  and  promoters  of  trust  monopolies,  two  United 
States  senators — altogether  fifty-one  names.  The  names 
in  the  directorates  of  the  Mutual  and  New  York  Life 
companies  are  fewer,  but,  so  far  as  they  go,  are  almost 
identical.  And  so  with  the  great  consolidated  and  re- 
organized railway  companies,  industrial  corporations, 
trust  companies,  and  banks.  The  reserve  assets  of  these 
three  insurance  companies  alone  aggregate  over  $1,200,- 
000,000.  These  funds  have  been  collected  from  policy- 
holders all  over  the  country  in  the  form  of  premiums. 
The  man  who  takes  out  a  policy  in  an  insurance  com- 
pany really  makes  a  deposit  only  slightly  different  from 
a  deposit  in  a  savings  bank.  He  asks  an  incorporated 
agency  to  take  his  money  and  invest  it  for  him,  because 
he  distrusts  his  own  judgment.  The  transaction  is  really 
that  of  a  full-grown  citizen  selecting  a  guardian,  how- 
ever much  its  real  character  be  concealed  by  verbiage. 
A  still  larger  sum  is  deposited  in  savings,  national,  and 
other  banks  in  interior  cities  and  country  towns  through- 
out the  country.  Most  of  it  has  been  by  these  banks 
deposited  in  New  York  banks,  and  by  the  latter  loaned 
out  or  invested  by  the  directorates  before  mentioned, 
along  with   the   insurance  reserves.      Six   hundred   mil- 

163 


BOSSISM    AND    MONOPOLY 

lions  are  annually  paid  in  insurance  premiums  and  ten 
billions  deposited  in  banks.  Another  great  sum  is  ab- 
sorbed from  the  earnings  of  labor  and  profits  of  busi- 
ness by  public-service  corporations  and  intrusted  to  the 
same  directorates.  It  is  not  strange,  then,  that  these 
fifty-one  men  constitute  a  despotism,  the  real  govern- 
ment of  the  nation.  It  would  be  strange  if  they  did 
not  so  use  the  power  thus  placed  in  their  hands  by  the 
normal  workings  of  the  existing  system  as  to  dictate 
financial  and  tax  laws,  coerce  or  hire  the  granting  of 
special  legislative  favors  of  enormous  value,  and  pre- 
vent the  passage  of  every  measure  calculated  to  reduce 
the  power  thus  held  or  to  relieve  from  abuses  of  the 
power  practiced  by  them. 

Lawson  is  but  one  of  many  witnesses,  and  what  he 
relates  are  but  some  of  the  facts  adducible  to  prove 
that  what  has  been  so  often  charged,  and  sometimes  de- 
nied, is  true,  namely,  that  we  have  in  this  country  an 
established  and  recognized  despotism  of  wealth.  But 
he  falls  short  of  ascribing  to  it  its  most  important 
power.  True,  it  is  the  ruling  power  in  finance;  but  it 
rules  transportation,  the  principal  thing,  to  which 
finance  is  but  one  of  the  annexes.  Transportation  has 
come  to  be  more  and  more  the  basis  of  our  national 
finance.  It  is  the  basis,  the  origin,  and  mainstay  of 
many  other  institutions  about  which  so  much  has  been 
written.  All  the  gigantic  corporations  called  "  trusts  " 
have  their  roots  in  the  fertile  soil  of  transportation. 
We  speak  of  the  value  of  the  property  of  the  nation 
and  place  it  at  $100,000,000,000.  But  how  much  value 
would  there  be  without  the  proximity  of  a  supply  of 
transportation.''  There  is  no  denying  the  importance 
of  the  fact  that  Mr.  Morgan,  Mr.  Rockefeller,  and  a 
few  others  have  somehow  contrived  to  obtain  the  power 
to  decide  how  much  or  how  little  of  the  medium  of 
exchange  each  individual  may  receive  and   use  in   the 

164 


MONOPOLIES    AND    THE    GOVERNMENT 

course  of  one  year.  But  what  is  still  more  important, 
and  is  much  more  obvious,  is  the  fact  that  they  have 
control  also  of  all  steam  and  street-railway  transporta- 
tion within  reach  of  about  ninety  per  cent  of  the  people, 
and  of  many  of  the  other  essential  adjuncts  of  modern 
life.  If  you  are  on  Fourteenth  Street  in  New  York 
you  cannot  go  any  considerable  distance  with  any  com- 
fort, and  within  a  reasonable  time,  without  leave  of  some 
lord  or  duke  of  The  Kingdom  who  owns  a  controlling 
interest  in  the  street-railway  service;  nor  can  you  leave 
the  island  without  the  consent  of  some  member  of  the 
group.  Being  in  San  Francisco  or  Denver  or  Chicago, 
you  cannot  travel  in  any  direction  without  leave  of  that 
particular  member  of  the  same  "  system  "  in  control  of 
the  particular  line  over  which  you  may  wish  to  travel. 
You  cannot  honestly  obtain  a  scrap  of  clothing  or  an 
ounce  of  food  without  buying  something  into  which 
their  control  has  entered  and  become  part  of  its  value. 
In  short,  you  are  as  dependent  on  them  for  food, 
clothing,  and  adequate  means  of  locomotion  as  you  are 
upon  the  Government  for  its  protecting  laws;  and  one 
might  as  easily  conceive  of  civilization  without  trans- 
portation as  of  civilized  society  without  laws.  It  is 
true  that  you  are  dependent  upon  the  "  Beef  Trust  " 
for  meat,  the  "  Leather  Trust  "  for  shoes,  the  "  Sugar 
Trust  "  for  saccharine ;  but  it  must  be  remembered  that 
you  could  not  even  be  aided  by  a  monopoly  unless  it  were 
in  turn  aided  by  the  great  underlying,  overreaching 
monopoly  of  all  monopolies,  the  transportation  trust. 

A  decade  ago  we  spoke  of  the  great  railway  mag- 
nates as  constituting  one  group,  and  of  those  engaged  in 
the  oil  business,  tobacco  business,  sugar  business,  iron  and 
steel  and  banking  businesses,  etc.,  as  constituting  other 
groups.  But  now,  taking  the  names  of  the  great  rail- 
way financiers  for  a  starting  point,  and  running  them 
through,  we  find  the  same  names  not  only   appearing 

165 


BOSS  ISM    AND    MONOPOLY 

in  the  directorates  of  all  the  great  railway  systems,  but 
in  those  of  the  leading  insurance  and  banking  corpo- 
rations, and  in  some  of  the  leading  industrial  corpora- 
tions as  well — the  great  dominating  interest  being  that 
of  transportation. 

Those  who  have  not  taken  the  trouble  to  investigate, 
nor  thought  seriously,  have  but  a  faint  conception  of 
the  magnitude  and  power  of  the  railroads  in  the  United 
States.  The  term  "  railroads  "  in  this  connection  in- 
cludes, of  course,  the  appurtenances  of  railroad  owner- 
ship and  management,  railroad  securities,  stocks,  bonds, 
etc.  The  legal  holders  of  these  are  the  owners  of  the 
railroads.  Whatever  affects  the  earning  capacity  or 
permanent  value  of  the  physical  property — which  we  are 
graciously  permitted  to  see  and  use  at  a  price  fixed  for 
us  by  the  owners  without  our  consent — affects  the  rate 
of  interest  on  bonds  and  dividends  on  stock.  These 
securities  are  the  main  subjects  of  speculation  in  Wall 
Street,  are  pledged  as  security  for  money  employed  in 
speculation  on  the  stock  exchanges  of  the  country,  and 
are  bought  for  investment  by  trust  companies,  syndi- 
cates, and  capitalists.  Their  use  for  speculative  and 
investment  purposes  overshadows  all  other  financial  op- 
erations. Through  the  operations  of  this  Kingdom  of 
High  Finance  labor  will  be  actually  enslaved,  while  re- 
taining nominal  freedom.  And  the  people  not  employed 
as  wage-earners  will  stand  in  awe  not  of  those  in  official 
authority,  but  of  a  tyrant  outside  the  Government  that 
feels  not,  but  only  wills,  decrees,  and  executes. 


166 


CHAPTER    VIII 

EVILS    AND    ABUSES    BY    RAILROADS    IN    PRIVATE    HANDS 

CONTROL     OF     LEGISLATION     AND     POLITICAL     INTER- 
FERENCE 

Candidates,  senatorial,  congressional,  gubernatorial, 
and  others,  make  loud  and  profuse  protestations  of  un- 
dying hostility  against  railroad  oppression  and  every 
form  of  monopoly.  But  somehow  It  always  mysteriously 
comes  about  that  nothing  Is  done,  that  platform  resolves 
and  eloquent  harangues  are  as  sweet  music  wasted  on 
desert  air,  that  public  opinion  cannot  be  crystallized  in 
the  form  of  law ;  or,  if  laws  are  passed,  they  are  the 
mere  skeletons  of  good  Intention,  the  substance  of  the 
original  bill  having  been  frittered  away  in  amendments 
proposed  by  the  attorneys  and  lobbyists  of  the  trusts 
and  syndicates,  some  of  whom  sit  in  senatorial  livery 
within  the  sacred  precincts  of  the  "  highest  legislative 
body  in  the  world."  It  took  ten  years  of  agitation, 
during  which  railroad  discrimination  and  pillage  went 
unchecked,  to  secure  the  passage  of  the  Interstate  Com- 
merce act.  When  It  at  length  saw  the  light  after 
moldering  In  committee  session  after  session,  it  was  the 
mere  shadow  of  Its  former  self,  so  that  the  President 
had  no  occasion  to  veto  It  to  preserve  "  vested  rights." 
All  Its  vitality  had  already  been  vetoed  by  the  railroad 
hirelings  in  and  out  of  the  Senate.  The  people  have 
groaned  under  the  inflictions  and  extortions  of  trusts 
and  railroad  pools  for  many  years,  and  have  clamored 
at  the  doors  of  Congress  all  the  time  for  legislation 
12  167 


BOSSISM    AND    MONOPOLY 

against  them.  On  the  eve  of  elections,  and  when  it  was 
known  to  be  too  late  to  secure  their  passage,  buncombe 
bills  have  been  introduced  for  political  effect  and  have 
gone  to  committees  whence  no  such  traveler  was  ever 
known  to  emerge. 

The  same  "  highest  legislative  body  in  the  world  " 
has  within  the  last  thirty-five  years  given  away  land 
out  of  which  seven  or  eight  States  of  average  size  might 
have  been  constructed,  and  generously  loaned  the  credit 
of  all  the  people  to  the  amount  of  over  $100,000,000 
to  private  corporations  engaged  in  private  enterprises, 
and  has  further  accommodated  them  by  paying  the  in- 
terest on  the  guarantees  thus  given.  The  long  and 
strong  arm  of  the  law  was  stretched  forth  to  protect 
railroad  property  from  trespass  in  the  same  year,  but 
Congress  came  very  near  granting  an  extension — equiv- 
alent to  a  gift — of  the  amount  due  by  the  roads,  and 
ultimately  made  an  adjustment  with  the  Union  Pacific 
which  lost  to  the  people  over  $27,000,000. 

The  amount  paid  for  railroad  mail  transportation 
in  1902  was  $38,500,000,  which  was  $1,500,000  more 
than  is  paid  for  that  service  by  all  other  countries  to- 
gether. The  same  rates  are  paid  as  were  paid  thirty 
years  ago,  although  freights  and  fares  have  decreased 
one  hundred  per  cent  and  over.  The  rates  paid  the 
railroads  by  express  companies  are  only  one-eighth 
what  the  Government  pays  for  the  same  weight  of  mail 
matter,  although  the  latter  is  more  convenient  to  handle 
and  there  is  less  risk.  The  money  that  will  be  paid  the 
railroads  for  this  service  in  1905  will  hardly  be  less 
than  $50,000,000  at  least ;  four-fifths,  or  $40,000,000, 
of  which  will  be  extortion  and  subsidy.  If  the  Govern- 
ment owned  the  roads,  the  additional  wear  and  tear  of 
rolling  stock  and  the  pay  of  a  few  additional  employees 
would  be  the  only  cost  for  this  service.  Five  million 
dollars  annually  would  fully  cover  it.     This  $45,000,- 

168 


CONTROL    OF    LEGISLATION 

000  saved  would  pay  interest  on  $3,500,000,000,  which 
is  about  one-half  of  what  it  would  cost  to  obtain  govern- 
ment ownership  of  the  railroads  at  a  fair  valuation. 

Now  these  far-reaching,  outrageous  discriminations 
in  favor  of  the  rich  and  mighty  are  not  brought  about 
by  fair  and  honest  argument,  nor  are  they  fashioned 
in  the  hands  and  brains  of  statesmen,  Christians,  and 
patriots.  This  is  not  saying  that  a  majority  or  large 
proportion  of  our  national  lawmakers  and  Cabinet  offi- 
cers are  dishonest,  corrupt,  unwise,  and  unpatriotic ;  but 
enough  of  them  are  so  to  turn  the  scale  when  a  political 
aspect  is  given  to  such  questions  and  the  legislative  body 
divides  on  party  lines. 

The  Senate  is  such  a  peaceful,  orderly  place  that 
it  has  been  very  aptly  likened  to  a  padded  cell.  There 
a  senator  may  fight  through  his  whole  term  and  never 
make  the  slightest  impression.  There  Senators  Mor- 
gan, Mason,  Hoar,  Teller,  and  a  few  others  stood  for 
many  years  exposing  usurpations  and  various  forms  of 
legislative  and  executive  wickedness,  and  their  efforts 
have  counted  for  as  little  as  if  they  had  been  command- 
ing the  dead  to  rise  from  the  grave. 

Ex-Senator  Mason,  of  Illinois — who,  be  it  said  to 
his  everlasting  credit  when  the  reasons  are  considered, 
failed  of  a  reelection  to  the  Senate — stated  recently  that 
ninety  per  cent  of  the  bills  before  Congress  are  there 
all  the  time.  They  are  introduced  at  the  beginning  of 
one  Congress,  only  to  die  on  the  files  at  the  clearing  of 
the  calendar  at  the  beginning  of  the  next  Congress;  to 
be  reintroduced,  to  hang  on  for  two  years  longer,  to  die 
again,  and  rise  again  while  Congi'esses  continue  to  come 
and  go.  This,  he  says  (and  results  justify  full  be- 
lief in  his  statement)  is  because  the  private  interests 
in  the  Senate  will  not  permit  these  bills  to  come  to  a 
vote  and  so  reach  a  settlement  of  the  questions  involved. 
What  are  these  private  interests.''     The  railroads   and 

169 


BOSS  ISM    AND    MONOPOLY 

industrial  monopolies.  How  do  they  strangle  legisla- 
tion other  than  that  which  promotes  special  interests? 
Through  partisan  and  boss  tyranny. 

One  naturally  hesitates  to  write  disrespectfully  of 
our  highest  and  traditionally  most  honorable  legislative 
body.  But  one  having  on  his  side  truth  and  a  good 
motive  need  not  fear  or  hesitate  to  speak  frankly  to 
Americans,  even  concerning  their  idols.  Expressly  and 
by  implication  the  Senate  and  individual  senators  have 
been  much  accused  and  ridiculed  in  public  speech  and 
print,  and  yet  the  people,  not  having  before  them  the 
proofs,  are  inclined  to  disbelieve  that  where  there  should 
be  such  exalting  influences  there  can  be  more  than  an 
occasional  instance  of  dishonor  and  of  surrender  to  de- 
basing and  corrupting  influence.  They  are  probably 
justified  in  consoling  themselves  with  the  assumption 
that  only  a  minority  are  subservient  to  other  than 
patriotic  inducements  to  action  and  non-action  where 
public  interests  are  vitally  involved. 

It  has  been  only  within  the  last  decade  that  indis- 
putable evidence  has  ajjpeared  that  the  Senate  is  boss- 
ridden  like  town  councils  and  other  legislative  assem- 
blies. From  the  day  that  Marcus  A.  Hanna  entered 
the  Senate  to  the  date  of  his  death  he  was  a  very  potent 
influence  in  shaping  and  preventing  legislation ;  and 
since  he  died  a  certain  other  senator  has  been  generally 
known  as  the  dominating  voice  on  the  side  of  the  ma- 
jority, at  least  on  all  questions  aff'ecting  certain  great 
private  interests  intrusted  to  his  watchful  care.  This 
power  he  exercises  not  by  reason  of  any  great  degree 
of  statesmanship,  but  because  his  character  and  prac- 
tical training  peculiarly  adapt  him  to  perform  the  kind 
of  work  that  the  great  financiers  desire  to  have  done  in 
and  about  the  Senate.  Wlien  one  examines  his  career, 
his  political  performances  in  the  State  that  elects  him, 
and  the  meager  opportunities  to  become  qualified   for 

170 


CONTROL    OF    LEGISLATION 

the  great  office  which  he  holds,  one  may  be  excused  for 
inquiring  why  his  party  associates  have  permitted  him 
to  become  a  steering  committee  of  one,  as  well  as  the 
head  of  one  of  the  committees,  the  most  important  and 
convenient  for  illegitimate  uses.  The  assertion  of  his 
boss-ship  of  the  Senate,  and  therefore  of  the  party  in 
power,  has  ceased  to  be  debatable.  He  is  sometimes 
called  the  "  Keeper  of  the  Senate's  Conscience,"  some- 
times as  the  "  Power  behind  the  Throne,"  and  at  other 
times  the  "  General  Manager  of  the  United  States." 
Perhaps  it  would  not  be  amiss  if  he  were  recognized  as 
the  possessor  of  all  these  titles.  He  is  ardently  devoted 
to  and  identified  with  high  finance  of  the  kind  described 
by  Lawson.  In  view  of  his  intimate  personal  and 
other  relations  to  the  Rockefellers,  as  well  as  his  iden- 
tity with  the  dominating  powers  in  the  world  of  finance, 
it  is  cause  for  wonder  that  the  Senate  would  so  despise 
and  ignore  public  opinion  as  to  tolerate  him  as  its 
leader  and  virtual  dictator  in  important  matters  of 
legislation.  He  hails  from  one  of  the  small  States,  but 
while  he  ably  represents  that  State  in  the  way  that  its 
people  desire  to  be  represented  in  the  Senate,  John  D. 
Rockefeller  could  not  more  faithfully  represent  Wall 
Street  were  he  elected  by  the  Standard  Oil  syndicate 
and  admitted  to  a  seat  there.  If  we  suppose  Wall 
Street  to  represent  England,  and  the  balance  of  the 
United  States  to  represent  India,  then  this  senator  is 
the  Viceroy.  When  any  question  arises  as  to  the  fiscal 
policy — that  is,  the  fiscal  policy  of  Wall  Street,  the 
United  States  having  none — he  obtains  instructions  from 
the  trust  and  bank  financiers  of  New  York,  Boston,  and 
Philadelphia.  When  the  laws  he  and  those  who  keep 
him  in  the  Senate  require  have  passed,  and  the  meas- 
ures they  do  not  want  have  been  smothered  or  killed, 
he  takes  a  vacation,  and  there  can  be  no  more  legisla- 
tion of  a   general   nature   at  that  session.      His   abso- 

171 


BOSSISM    AND    MONOPOLY 

lutlsm,  and  the  abject  submission  to  it  of  the  Senate, 
is  the  curse  of  party  rule  exempHfied  in  its  most  in- 
famous as  well  as  its  most  humiliating  aspect. 

Since  the  Senate  possesses  an  absolute  veto  on  meas- 
ures passed  by  the  House ;  and  since  it  has  of  late  usurped 
more  and  more  the  prerogatives  of  the  Executive,  and 
thus  become  practically  the  Government;  and  since  that 
Government  readily  responds  to  the  will  of  the  Senate 
boss  and  stands  for  the  interests  of  a  few  men  in  Wall 
Street  only,  the  statement  so  often  heard,  that  the  time 
will  soon  come  when  this  Government  will  be  a  Republic 
in  name  or  form  only,  may  as  well  be  revised  and  the 
present  tense  substituted  for  the  future. 

Among  the  great  interests  represented  by  the  Sena- 
torial boss  is  the  Pennsylvania  Railroad,  the  richest  rail- 
road corporation  in  the  world,  said  to  uniformly  influ- 
ence the  election  of,  and  always  carry  on  its  pay  roll, 
at  least  five  United  States  senators.  The  accumulative 
power  in  Congress  of  that  company  is  illustrated  by  the 
history  of  its  terminal  facilities  at  Sixth  and  B  streets 
in  the  heart  of  the  capital  city.  There  for  thirty  years 
it  has  occupied  depot  and  switch-track  space  on  property 
of  the  United  States,  a  property  which  at  any  time 
during  that  period  would,  but  for  its  occupancy,  have 
sold  for  over  .$1,000,000.  For  this  valuable  privilege  it 
pays  not  a  penny  to  the  Government.  A  fair  rental, 
say  the  equivalent  of  six  per  cent,  would  have  amounted 
to  $1,800,000  to  date. 

A  great  conspiracy  of  silence  and  absorption  makes 
it  possible  for  many  tyrannies  to  be  perpetrated  under 
the  innocent  titles  of  congressional  statutes  affecting 
the  people  in  their  purchases  and  incomes  without  peo- 
ple knowing  it.  Sinister  provisions,  carefully  worded, 
are  sometimes  nicely  tucked  away  in  the  folds  of  blanket 
measures.  For  instance,  in  the  Dick  Military  bill,  every 
able-bodied  citizen  between  eighteen  and  fortv-five  years 

172 


CONTROL    OF    LEGISLATION 

of  age  is  made  a  member  of  the  National  Guard,  sub- 
ject to  be  called  into  active  service  at  the  will  of  the 
President.  In  case  of  another  railway  strike  such  as 
occurred  in  1894,  or  coal-workers'  strike  such  as  that  of 
1902,  every  member  of  the  striking  union  may  be  called 
upon  to  put  down  his  own  strike,  and  court-martialed 
if  he  does  not  obey  the  order.  How  many  members  of 
trade  unions  know  of  this  provision .?  The  monopolists 
all  know  of  it,  because  they  are  endeavoring  to  exclude 
from  employment  all  over  forty-five  years  of  age,  and 
in  some  instances  all  over  thirty-five.  It  is  thus  seen 
how  easily  a  President  elected  with  the  aid  of  trust  con- 
tributions can  nullify  a  strike  order. 

The  outer  and  superior  force  emanating  from  the 
transportation  interests  of  the  country  also  reaches  the 
executive  heads  of  the  Government,  especially  when  they 
have  presidential  aspirations.  On  May  24,  1905,  Hon. 
W.  H.  Taft,  representing  the  administration,  delivered 
a  "  keynote  "  speech  to  the  Republican  State  Conven- 
tion at  Columbus,  Ohio,  in  which,  after  explaining  the 
provisions  of  the  Esch-Townsend  bill,  and  pointing  out 
that  it  does  not  give  a  commission  any  power  to  go 
into  a  general  process  of  rate-making,  said :  "  We  can 
certainly  trust  our  lawgivers  to  respond  to  the  popular 
demand  and  to  regulate  the  railways,  so  far  as  they 
ought  to  be  regulated,  without  interfering  with  that 
control  over  their  own  property  and  with  that  motive 
for  efficiency  and  economic  management  which  are  still 
required  to  make  successful  the  enormous  business  of 
railway  transportation  in  America."  Judge  Taft  is  a 
man  of  too  exalted  character  to  be  consciously  influ- 
enced by  corrupt  or  even  questionable  motives;  but  is 
not  the  foregoing  just  about  what  INIr.  Harriman — the 
Standard  Oil  director  in  numerous  railroad  directorates 
— and  Mr.  Gould  will  find  it  convenient  and  profitable  to 
repeat  in  attempts  to  have  underwritten  and  floated  new 

173 


BOSS  ISM   AND    MONOPOLY 

stock  and  bond  issues  which  have  been  authorized,  and 
others  in  contemplation?  Could  Wall  Street  ask  more 
than  is  here  promised?  Do  these  words  read  as  if  the 
President  were  going  to  quarrel  with  the  senatorial  pro- 
gramme, "  We  can  certainly  trust  our  lawgivers  to  re- 
spond to  the  popular  demand,"  etc.?  This  felicitous 
state  of  trustfulness  is  no  doubt  inspired  by  the  Senate's 
past  performances  in  responding  to  such,  and  only  such, 
popular  demands  as  reached  it  through  Wall  Street 
agencies. 

In  but  few  of  the  States  is  any  legislation  possible 
affecting  in  any  degree  railroad  interests  in  which  the 
dominating  influence  of  the  twin  rulers,  the  party  boss 
and  the  railroad,  do  not  enter;  also  few  in  which,  in 
order  to  exercise  their  power,  they  do  not  select  enough 
of  the  party  candidates  to  make  their  sway  complete. 

A  New  York  paper  which  makes  a  ferocious  fight 
against  railroad  and  other  monopolies  on  side  issues,  but 
takes  care  to  keep  in  their  favor  by  opposing  each  and 
every  remedy  that  is  proposed,  makes  the  proposition  for 
Federal  rate  regulation  a  pretext  for  saying  that,  "  as 
another  long  step  in  the  direction  of  extreme  central- 
ization. Federal  supervision  of  rates  will  offer  organized 
capital  new  inducements  to  seek  to  control  presidential 
elections."  That  is  a  confession  that  monopoly  power 
has  reached  a  point  in  this  country  that  the  Government 
dare  not  take  any  step  against  it,  lest  it  exercise  that 
power  to  subvert  the  will  of  the  people  at  the  ballot 
box.  And  it  is  no  doubt  true  that  the  power  would  be 
used  to  nullify  any  measure  designed  merely  to  regu- 
late rates  by  interference  in  elections  as  suggested.  It 
might  be  answered  that  monopolies  control  elections  for 
President  by  financing  campaigns,  even  without  this  in- 
centive; but  instead  of  the  people  retreating,  or  longer 
submitting  to  it,  they  should  resort  to  the  remedy  of 
government  ownership,  which  will  eradicate  the  intoler- 

174 


CONTROL    OF    LEGISLATION 

able  evil.  Government  ownership  of  public  utilities  will, 
in  addition  to  benefiting  society  as  a  whole  financially, 
rid  it  of  the  one  great  danger,  the  one  element  of  sure 
destruction.  Nine-tenths  of  the  public  corruption  has 
its  source  in  dealings  between  owners  of  natural  mo- 
nopolies and  the  various  departments  of  the  Govern- 
ment, local,  State,  and  national.  The  intermediary  or 
go-between,  without  which  this  species  of  crime  could 
seldom  be  committed,  is  the  party  boss.  Sometimes  he 
goes  to  those  seeking  control  of  the  franchise,  easement, 
exclusive  contract,  or  privilege,  as  the  representative  of 
public  officers;  but  oftener  he  approaches  the  latter 
bearing  a  commission  and  a  "  fee  "  or  "  retainer,"  more 
properly  called  a  corruption  fund. 

The  senatorial  atmosphere  at  the  capital  is  now  such 
that  unless  a  newly  elected  senator  yields  to  the  reason- 
ing advanced  by  the  monopoly  lobby,  and  conforms  his 
conduct  to  the  regime  of  the  Wall  Street  despotism,  he 
might  socially  just  as  well  be  a  Hottentot;  and  his  rela- 
tions with  those  senators  who  control  legislation  render 
his  term  there  about  as  pleasant  as  if  he  were  without 
a  passport  in  a  foreign  country  whose  language  he 
could  not  speak.  The  Senate  was  created  not,  as  so 
often  asserted,  to  constitute  a  check  upon  hasty  legis- 
lation by  the  House,  but  as  a  check  upon  the  people, 
who,  by  the  way,  are  now  of  sufficient  intelligence  to 
know  their  own  wills.  The  Senate  might  very  well  be 
abolished;  but  lest  a  majority  could  not  agree  to  dis- 
pense with  it  entirely,  the  next  best  thing  would  be  to 
make  it  elective  by  popular  vote. 

Few  of  those  who  will  read  this  have  seen  or  are 
thoroughly  convinced  that  there  exists  a  back-door  as 
well  as  a  front-door  entrance  from  the  real  seat  of  gov- 
ernment in  Wall  Street  to  the  seat  of  nominal  power 
at  Washington.  But  that  it  exists  and  is  much  used 
may  be  just  as  safely  asserted  as  that  men's  acts  speak 

175 


B0SSIS3I    AND    MONOPOLY 

more  convincingly  than  their  words.  When  one  looks  in 
upon  the  Senate  he  may  not  see  anything  out  of  the 
way.  There  is  considerable  dignity  and  formality  and 
some  good  acting  of  the  farce  entitled,  "  How  not  to 
do  it,  and  yet  seem  to  do  it,"  and  that  is  all.  A  little 
investigation  will  disclose  a  very  quiet  gentleman  dart- 
ing in  and  out.  Don't  mistake  him  for  the  sceneshif ter. 
He  is  the  stage  manager,  otherwise  known  as  the  party 
boss.  Do  you  ask  how  he  obtained  the  position?  He  is 
elected  and  reelected  at  the  dictation  of  Wall  Street. 
Now  you  understand  the  Siamese  twinship  between 
"  High  Finance  "  and  the  Senate.  You  have  also  found 
the  connecting  link.  The  people  must  capture  the  sena- 
torial stronghold.  They  can  do  this  with  what  they 
have  left — their  votes. 

There  is  still  another,  a  positive  and  far-reaching 
evil,  seldom  discussed  in  public  form,  which  comes  as 
properly  under  this  head  as  any  other.  It  is  the  subtle, 
coercive  influence  upon  citizens  with  respect  to  their  pri- 
vate conduct  and  business  and  their  political  utterances. 

The  country  swarms  with  railroad  spies,  secret-ser- 
vice men,  and  eavesdroppers.  Institutions  maintaining 
secret-service  systems,  whether  political,  quasi-public,  or 
private,  are  almost  invariably  tyrannical.  Neither  free 
governments  nor  honestly  conducted  corporations  require 
spies  to  follow  and  watch  law-abiding  citizens.  This 
practice  started  with  the  Standard  Oil  Company  at  the 
very  beginning  of  its  war  on  independent  producers 
and  refiners,  and  was  borrowed  from  that  institution, 
and  is  now  a  well-established  department  of  every  rail- 
road of  consequence  in  the  country.  The  espionage  ex- 
tends not  only  to  all  employees  of  the  company,  but  to 
all  professional  and  business  men — to  everyone  who  may, 
at  any  time,  exert  an  influence  politically  or  financially 
inimical  to  the  interest  of  the  corporation.  Any  one  of 
these  classes  runs  a  risk  of  sometimes  having  any  hos- 

176 


m 


CONTROL    OF    LEGISLATION 

tile  expression  reported  to  the  management  and  used 
against  him  to  prevent  the  consummation  of  some  object 
dear  to  his  heart  or  vital  to  his  material  interest. 

Henry  D.  Lloyd,  in  "  Wealth  against  Common- 
wealth," says :  "  Monopoly  cannot  be  content  by  con- 
trolling its  own  business.  It  is  the  creature  of  the  same 
law  which  has  driven  the  tyrant  to  control  everything — ■ 
government,  art,  literature,  even  private  conversation. 
Any  freedom,  though  seemingly  the  most  remote  from 
any  possible  bearing  upon  the  tyrant,  may — will — grow 
from  a  little  leak  of  liberty  into  a  mighty  flood,  sweeping 
his  palaces  and  dungeons  away.  The  Czar  knows  that  if 
he  lets  his  people  have  so  much  freedom  as  a  free  talk 
in  their  sitting-rooms,  their  talk  will  gather  into  a  tor- 
nado. In  all  ages  wealth,  like  all  power,  has  found 
that  it  must  rule  or  nothing.  Its  destiny  is  to  rule  or 
ruin.  Hence  we  find  it  in  America  creeping  higher 
every  year  up  into  the  seats  of  control.  Its  lobbyists 
force  the  nomination  of  legislators  who  will  get  passed 
such  laws  as  it  wants  for  its  judges  to  construe." 


177 


CHAPTER    IX 

EVILS  OF,  AND  ABUSES  BY,  RAILROADS  IN  PRIVATE  HANDS 
UNREASONABLY  HIGH  RATES,  HEREIN,  OF  FRAUD- 
ULENT AND  INFLATED  ISSUES  OF  SECURITIES,  COM- 
MONLY   KNOWN    AS    "  OVERCAPITALIZATION  " 

Overcapitalization,  which,  whatever  its  original 
purpose,  is  now,  in  the  case  of  nearly  every  railroad, 
used  as  a  cloak  for  the  concealment  of  extortionate  rates, 
so  connects  itself  with  the  question  of  rates  as  to  render 
it  practically  impossible  to  give  them  separate  discus- 
sion. Therefore  they  are  here  treated  in  the  same  chap- 
ter. Overcapitalization  is  the  swelling  of  railroad  and 
other  corporate  indebtedness  by  the  issue  of  stock  and 
sale  of  bonds  to  represent  exaggerated  or  non-existent 
capital. 

If  the  results  of  such  transactions  were  confined  to 
investors  in  the  stocks  and  bonds,  the  evil  would  be  of  a 
limited  extent  and  a  subject  of  only  quasi-public  im- 
portance. But  the  corporations  whose  officers  water 
stocks  and  create  excessive  indebtedness  are  natural  mo- 
nopolies, and  as  such,  whether  by  our  grace  or  against 
our  protest,  hold  in  their  grasp  our  commercial  and 
industrial  affairs  to  a  very  great  extent. 

Mr.  David  A.  Wells,  in  "  Economic  Changes,"  esti- 
mated that  the  cost  of  constructing  railroads,  owing  to 
the  extraordinary  reduction  in  the  price  of  rails  and  to 
the  invention  of  excavating,  blasting,  and  other  labor- 
saving  machinery,  had,  in  1889,  decreased  one  hundred 
per  cent.  He  instances  the  case  of  one  of  the  leading 
Northwestern  roads  which  in  1870  bonded  a  line  of  126 

178 


OVERCAPITALIZATION 

miles,  upon  which  considerable  tunneling  was  necessary, 
at  $40,000  per  mile,  and  states  that  in  1889  (when  he 
made  the  estimate)  the  cost  of  constructing  the  same 
road  would  not  have  exceeded  $20,000  per  mile.  Since 
1889  still  further  improvements  have  been  made,  re- 
ducing the  cost  of  blasting  and  excavating  at  least 
one-third,  and  the  price  of  steel  rails  has  still  further 
materially  declined,  so  that  it  may  be  safely  asserted 
that,  in  the  absence  of  extraordinary  engineering  diffi- 
culties, railroads  may  now  be  constructed,  capable  of  con- 
stant service  with  the  heaviest  traffic,  including  depots, 
terminals,  ordinary  bridge  construction  and  tunneling, 
where  the  lines  extend  long  distances,  exclusive  of  equi- 
page, at  an  average  cost  of  $15,000  per  mile. 

That  the  above  is  not  an  unreasonable  or  an  exag- 
gerated estimate  of  the  reduction  in  the  cost  of  railroad 
construction  the  following  facts  and  figures  will  prove. 
To  construct  the  main  line  of  the  Union  Pacific  from 
Council  Bluffs  to  Ogden  would  not  now  cost  more  than 
many  of  its  numerous  branch  lines,  which  have  been  built 
at  from  $8,000  to  $15,000  per  mile  and  capitalized  at 
three  or  four  times,  and  in  some  instances  five  times, 
their  cost.  For  instance,  107  miles  of  the  Kansas  Mid- 
land, including  all  equipment,  only  cost  $10,200  per  mile, 
thirty  per  cent  of  which  was  donated  by  the  municipali- 
ties along  its  line.  And  the  Union  Pacific,  from  Eldora 
to  McPherson,  Kan.,  cost  less  than  $10,000  per  mile. 
According  to  the  estimate  given  by  the  Union  Pacific 
Company  to  the  Utah  Board  of  Equalization,  a  few 
years  ago,  the  average  cost  of  the  Utah  Central  was 
only  $7,298  per  mile.  By  the  latest  issue  of  "  Poor's 
Manual  "  it  appears  that  the  average  capitalization  of 
the  Union  Pacific  is  $78,000  per  mile,  that  of  the 
main  lines  being  $134,000  per  mile.  Henry  Clews,  in 
"  Twenty-eight  Years  in  Wall  Street,"  says : 

"  After  the  Thurman  bill  had  been  sustained  by  the 
179 


BOSSISM    AND    MONOPOLY 

Supreme  Court,  Mr.  Gould  had  a  plan  to  build  a  road 
from  Omaha  to  Ogden,  just  outside  the  right  of  way 
of  the  Union  Pacific,  and  give  that  road  back  to  the 
Government.  It  would  give  others  a  '  chance  to  walk.' 
The  Government  tried  to  squeeze  more  out  of  the  turnip 
than  was  in  it.  For  $15,000  per  mile,  or  $15,000,000 
for  the  entire  length  of  the  road,  a  road  could  be  built 
where  the  Union  Pacific  absorbed  $75,000,000." 

If  it  be  conceded  that  the  owners  of  railroad  prop- 
erty should,  like  the  owners  of  other  property,  them- 
selves stand  the  loss  of  shrinkage  in  values  resulting 
from  economic  changes,  then  fair  capitalization  should 
not  be  above  the  present  cost  of  reproduction  per  mile 
for  roadbed  and  trackage.  The  proportion  of  value 
between  rolling  stock  and  roadbed  varies  according  to 
the  route,  terminal  point,  and  character  of  traffic;  but 
taking  an  average  road,  doing  a  miscellaneous  traffic 
and  traversing  almost  every  character  of  territory — the 
Baltimore  &  Ohio,  for  instance — we  find  the  propor- 
tionate value  between  the  equipment  and  stationary 
property,  as  given  by  the  officials  of  the  road  in  their 
report  for  1892,  to  be  about  one  to  three.  Here  again 
it  should  be  borne  in  mind  that  the  cost  of  manufactur- 
ing engines  and  cars  has  decreased  within  the  past 
twenty  years  fully  one-third.  The  estimates  given  by 
railroad  officers  in  reporting  rolling  stock  as  assets  are 
uniformly  based  on  first  cost,  without  any  reduction  on 
account  of  decreased  cost  of  production  and  deteriora- 
tion from  use  and  age.  In  reaching  actual  values  of 
rolhng  stock  we  can,  of  course,  only  approximate;  but 
if  we  reduce  the  estimates  of  railroad  officials  fifty  per 
cent  we  shall  still  be  on  safe  ground.  Placing,  then, 
rolling  stock  at  one-third  value  of  roadbed  per  mile,  we 
find  the  approximate  average  value  of  railroad  prop- 
erty, fully  equipped,  to  be  $20,000  per  mile.  In  1892 
there  were  171,570  miles  of  fully  equipped  steam  rail- 

180 


0  VERCA  PITA  LIZA  TION 

way  in  the  United  States.  At  the  above  valuation  it 
would  be  worth  $3,431,400,000.  In  1902  there  were 
195,385  miles,  which,  at  $20,000  per  mile,  would  now 
cost  to  reproduce  $3,907,700,000.  We  find  all  these 
railroads  capitalized  as  to  stock,  in  1892,  at  $4,863,- 
119,073,  or  at  $28,345  per  mile.  In  1902,  195,385 
miles  were  capitalized  as  to  stock  at  $5,806,566,204,  or 
$30,568  per  mile.  The  interest-bearing  indebtedness 
aggregated  $5,405,049,969,  or  $31,503  per  mile  in 
1892.  In  1902  the  interest-bearing  bonded  indebted- 
ness aggregated  $5,881,580,887,  or  $30,963  per  mile. 
Both  forms  of  liability  amount  to  $59,848  per  mile  in 
1892,  and  $61,531  per  mile  in  1902.  Now  if  this  stock 
valuation,  or  even  the  real  value,  represented  actual  in- 
vestment, the  returns  would  not  be  unreasonable.  But 
what  are  the  facts.''  The  stocks  on  which  dividends  are 
paid  represent  but  little  cash  actually  paid  by  the  stock- 
holders. Bonds  are  usually  issued  and  a  loan  procured 
before  a  spadeful  of  dirt  is  moved.  Construction  and 
betterment  are  almost  invariably  prosecuted  from  the 
beginning  upon  credit;  so  that  the  money  paid  by  the 
patrons  of  the  railroads  in  fares  and  freights,  to  keep 
down  interest  and  pay  the  principal  of  bonded  indebted- 
ness, goes  to  liquidate  liabilities  incurred  at  the  start 
by  the  owners  of  the  property,  and  any  dividends  paid 
to  the  latter  in  excess  of  these  charges  is,  for  the  most 
part,  an  extra  bonus  on  what  they  owe,  and  not  income 
from  actual  investments.  In  reality,  on  the  showing  of 
the  railroads  themselves,  the  public  are  paying  the  enor- 
mous debts  incurred  in  the  purchase  of  the  railroad 
property  of  the  country  at  a  grossly  exaggerated  pur- 
chase price,  or  paying  the  interest  on  it — which  is  the 
same  thing — and  paying  in  addition  dividends  to  the 
owners  of  an  equity  of  redemption  which  is  worth  a 
great  deal  less  than  nothing.  The  showing  is  much 
worse  if  we  take  the  actual  value  of  the  roads  based 

181 


BOSS  ISM    AND    MONOPOLY 

upon  the  present  cost  of  reproducing  them.  The  dif- 
ference between  this  value  and  the  bonded  indebtedness 
was,  in  1892,  in  round  numbers,  $1,973,000,000,  and 
in  1902,  $1,963,880,887.  The  difference  between  value 
and  stock  capitalization  was,  in  1892,  $1,431,719,073, 
and  in  1902,  $1,898,866,204;  that  is  to  say,  real  value 
is  less  than  two-thirds  of  stock  capitalization,  also  less 
than  two-thirds  of  bonded  indebtedness.  It  is  33.4  per 
cent  of  combined  stocks  and  bonds  in  1902,  almost  ex- 
actly one-third. 

The  interest  charge  for  1892  was  $232,000,000, 
and  dividends  $81,000,000,  aggregating  in  round  num- 
bers $311,500,000,  or  a  fraction  over  nine  per  cent  of 
actual  value,  so  that  the  cost  of  transportation  for 
persons  and  property  amounts  to  enough,  in  about 
eleven  years,  to  purchase  the  railroads  outright  at  their 
actual  value,  or  to  reproduce  them  newly  and  modernly 
equipped. 

In  this  connection  it  is  important  to  understand  that 
betterments  (repairs  and  improvements)  are  reckoned 
as  operating  expenses  and  annually  subtracted  from 
gross  earnings  to  find  net  earnings  out  of  which  interest 
and  dividends  are  paid.  Neither  is  it  an  adequate  show- 
ing of  railroad  extortion  to  take  a  dead  level  or  average 
of  dividends  for  a  single  year  of  complete  statistical 
information.  In  1890  the  average  was  over  two  per 
cent;  in  1888  it  was  four  per  cent.  In  1902,  1903, 
and  1904  it  was  over  five  per  cent,  when  we  include 
dividends  concealed  in  rentals  and  as  interest  on  bonds 
issued  to  represent  stocks. 

In  "  American  Railroads  as  Investments,"  Mr.  Van 
Oss  has  analyzed  the  methods  of  stock  watering  and 
given  some  striking  illustrations.  On  page  125  he  says: 
"  In  the  main  there  were  six  different  ways  of  inflating 
the  capital  of  American  railways:  1.  By  fraudulent 
issues  of  bonds  and  shares  as  a  downright  swindle  or 

182 


OVERCAPITALIZA  TION 

for  speculative  purposes.  2.  By  paying  too  much  for 
construction.  3.  By  purchasing  properties  at  excessive 
prices.  4,  By  buying  superfluous  competing  lines.  5. 
By  selling  bonds  and  shares  at  a  discount.  6.  By  de- 
claring stock  dividends.  Fraudulent  issues,  of  course, 
were  the  worst  form  of  '  watering.'  The  issue  of  se- 
curities of  chimerical  companies,  sold  in  Europe  for 
whatever  they  would  fetch,  has  little  to  do  with  our 
purpose,  since  it  was  an  ordinary  fraud  which  might 
have  been  perpetrated  as  well  with  canal,  steamship,  or 
any  other  securities.  The  fictitious  issue  of  stock  for 
the  purpose  of  manipulating  the  market,  however,  was 
of  more  direct  importance  to  shareholders.  The  Erie 
Railroad  has  been  cursed  with  it  more  than  any  other 
railway.  *  Jim '  Fisk  and  others  increased  the  share 
capital  of  that  company  between  1868  and  1872  from 
$17,000,000  to  $78,000,000,  mainly  to  manipulate 
Wall  Street.  In  the  same  manner,  though  not  in  the 
same  proportion,  the  thing  was  worked  all  over  the 
Union,  especially  in  connection  with  the  Pacific  roads, 
a  group  of  railroads  which  has  seen  more  frauds  than 
any  other." 

In  the  nature  of  the  case,  no  history  in  detail  of 
railroad  construction  and  finance  can  be  here  given. 
But  they  have  been,  as  a  rule,  conducted  openly,  with- 
out an  attempt  at  concealment.  It  has  been  shown  con- 
clusively by  facts  and  figures,  by  reputable  and  well- 
informed  writers  on  the  railroad  problem,  that  the  stocks 
rarely  represent  any  actual  investment.  The  usual,  if 
not  the  universal  method  of  incipient  financing  a  rail- 
road project  was  to  organize  the  company,  spend  a  few 
thousand  dollars  for  surveys  and  rights,  issue  the  stock 
to  the  promoters,  and  then  issue  and  sell  construction 
bonds  in  amount  sufficient  to  pay  the  cost  of  building 
the  road.  Out  of  the  proceeds  of  sale,  the  cost  of  sur- 
veys, rights  of  way,  and  charges  of  promoters  for  ser- 
13  183 


BOSSISM    AND    MONOPOLY 

vices  in  the  preliminary  work  were  also  paid.  What- 
ever stocks  were  afterwards  sold  to  the  public  were  sold 
by  the  incorporators,  the  proceeds  not  going  into  the 
road  but  to  the  individuals.  Of  course  there  may  have 
been  exceptions  to  this  method,  but  such  exceptions  are 
inconsiderable  in  amount.  So  it  is  a  correct  proposition 
that  the  bonds  exclusively  represent  investment  in  rail- 
road properties,  and  all,  or  nearly  all,  the  value  that 
has  been  given  to  stocks,  while  not  exactly  artificial 
value,  yet  is  value  which  attaches  because  of  earning 
power  over  and  above  that  which  usually  attends  the 
investment  of  capital  in  business. 

The  water  has  been  put  into  the  stocks  by  such  men 
as  Gould,  Morgan,  Rockefeller,  and  others,  who  have 
rigged  the  stock  exchanges  and  sold  them  at  inflated 
prices  projected  on  incomes  which  represent  frauds  and 
extortion  made  possible  by  the  possession  of  monopoly 
in  private  hands.  Let  those  who  have  permitted  them- 
selves to  be  loaded  up  with  these  stocks  unload  them 
back  to  those  who  sold  them.  Now  is  the  time  to  un- 
load. If  they  have  to  unload  at  a  loss,  the  loss  will  be 
less  now  than  if  they  wait  for  a  subsidence  of  the  tide 
now  rising  against  monopoly.  It  is  not  going  to  subside. 
It  is  erroneous  to  suppose  that  the  vast  funded  indebt- 
edness of  the  railroad  companies  is  held  by  strangers  to 
the  stockholders.  The  amount  of  the  bonds  in  the  hands 
of  the  public  is  trivial  in  comparison  with  the  amount 
held  by  those  who  own  the  stocks  in  blocks  representing 
millions.  Where  would  a  person  seek  the  bonds  of  the 
Vanderbilt,  the  Gould,  or  the  Harriman  roads?  If  he 
sought  them  elsewhere  than  in  the  strong  boxes  of  the 
principal  stockholders  he  would  seek  them  in  vain.  The 
bulk  of  the  stocks  and  bonds  are  not  only  owned  and 
held  by  small  coteries  of  individuals,  but  are  used  by 
them  in  the  stock  exchange  to  "  bear  "  and  "  bull  "  for 
speculative  purposes  those  outstanding. 

184 


OVERCAPITALIZATION 

Many  people  have  wondered  why  in  every  struggle 
to  prevent  the  expansion  of  the  circulating  medium,  the 
railroad  companies  of  the  country  are  found  arrayed 
on  the  side  of  contraction.  The  reason  is  apparent 
enough  when  we  reflect  that  the  stockholders — that  is, 
the  owners — are  the  principal  bondholders  and  creditors. 
Little  do  they  care  how  much  the  Government  contracts 
the  volume  of  the  currency  so  long  as  they  possess  a 
monopoly  of  the  inflation  business.  So  long  as  they 
can  clip  their  coupons  semi-annually,  the  larger  the 
dollars  specified  in  the  bonds  the  better  for  them  and 
the  worse  for  the  people  who  ultimately  have  to  pay 
them.  By  the  processes  of  refunding  and  reorganiza- 
tion, the  indebtedness  is  increased  and  extended  indefi- 
nitely, for  well  do  money  lenders  and  syndicates  know 
that  they  have  as  security  for  payment  of  principal  and 
interest  not  only  the  railroad  properties,  but  also  the 
earnings  of  the  people  dependent  upon  the  railroads 
for  service.  These  bonds  do  not  represent  outlays  of 
actual  cash. 

The  creating  or  floating  or  "  financing "  a  great 
railroad  indebtedness  is  a  fine  art,  too  complicated  and 
wonderful  for  the  common  understanding;  but  by  study 
of  the  reorganization  of  a  broken-down  company  or  of 
any  consolidation  scheme,  it  will  be  seen  that  most  of 
the  bonds  represent  other  bonds,  which  themselves  rep- 
resent small  values  or  outlays.  A  recent  practice  is  the 
issue  of  bonds  to  represent  stocks  placed  in  trust.  Often 
they  are  issued  for  a  controlling  amount  of  watered 
stock,  which  in  its  turn  represents  merely  a  worthless 
equity  of  redemption. 

The  foundation  of  the  nation's  prosperity  is  the 
production  of  crude  and  semi-crude  material,  the  growth 
of  cereals,  sugar  cane,  sugar  beets,  cotton,  wool,  fruits, 
vegetables,  hogs,  cattle,  horses,  the  output  of  metallic 
ores,  oils,  coal,  lumber,  and  fish.     These  products  rarely 

185 


BOSSISM    AND    MONOPOLY 

reach  the  second  stage  of  manufacture  at  the  place  of 
original  production,  but  must  be  transported  in  bulk 
hundreds  and  thousands  of  miles.  Hence  it  is  of  the 
greatest  importance  that  their  transportation  should  be 
burdened  with  as  little  charge  for  freight  as  possible. 
While  legislatures  have  in  some  cases  fixed  arbitrarily 
low  passenger  and  freight  rates,  such  legislation  has 
often  been  set  aside  by  the  courts  on  the  ground  that 
it  amounted  to  confiscation,  the  contention  that  the  com- 
panies were  entitled  to  collect  rates  sufficient  to  enable 
them  to  pay  moderate  dividends,  in  addition  to  operat- 
ing expenses  and  fixed  charges,  on  their  exaggerated 
and  inflated  capitalization,  being  dishonestly  or  igno- 
rantly  conceded.  Of  course  such  an  issue  does  not  admit 
of  an  investigation  into  the  question  of  proportion  be- 
tween actual  value,  which  should  form,  and  capitaliza- 
tion, which  does  form,  the  basis  of  calculation.  When 
told,  in  answer  to  complaints  against  high  charges, 
that  dividends  on  the  stock  of  the  corporation  in 
question  are  only  a  moderate  per  cent,  the  courts 
have  accepted  this  as  conclusive  evidence  of  only  mod- 
erate return  for  capital  invested,  whereas,  if  a  thor- 
ough investigation  were  instituted,  they  would  have  seen 
that  it  was  such  per  cent  on  three  times  the  actual 
investment. 

The  latest  estimate  of  aggregate  net  earnings  by 
all  the  railroads  of  the  United  States  for  one  year, 
given  by  the  Interstate  Commerce  Commission,  places 
the  amount  at  $605,616,795.  That  estimate  is  con- 
tained in  a  report  dated  December  15,  1902.  From  the 
same  report  it  appears  that,  compared  with  the  pre- 
ceding year,  the  net  earnings  were  greater  by  some 
$51,000,000.  And  as  showing  how  rapidly  the  profits 
of  the  railroads  have  increased,  a  period  of  five  years 
is  taken  by  the  commission,  and  it  is  shown  that  in  1897 
the  net  earnings  per  mile  were  but  $2,012,  whereas  for 

186 


m 


OVERCAPITALIZATION 

the  year  1901-2  they  amounted  to  $3,100.  Thus  is 
seen  how  monopoly  in  private  hands  takes  advantage 
of  any  period  of  prosperity  to  take  unto  itself  the  cream 
of  all  profits.  And  in  this  connection  it  is  to  be  noted 
that  this  was  a  period  of  progressive  consolidation  of 
great  railway  lines.  But  let  us  look  a  little  closer  into 
the  foregoing  figures.  Statistics  show  that  the  average 
annual  profits  of  all  business  done  in  the  country,  one 
year  with  another,  is  about  three  per  cent.  That  is  to 
say,  three  per  cent  is  added  to  all  capital  in  the  nation ; 
or,  putting  it  in  a  new  form  of  expression,  over  and 
above  the  expenditures  from  profits  of  business  and  earn- 
ings of  labor,  a  value  equal  to  three  per  cent  of  all 
prior  investments  is  added  thereto.  Now,  if  railroad 
owners  fared  equally  with  those  engaged  in  other  lines 
of  business,  they  would,  in  order  to  earn  $605,616,195, 
require  an  investment  of  $20,153,893,133.  But,  in 
fact,  it  is  susceptible  of  easy  demonstration  that,  with- 
out subtracting  anything  for  the  waste  which  has  char- 
acterized railway  construction,  especially  in  its  early 
stages,  not  more  than  one-fourth  of  the  above  sum 
has  been  invested  in  railroad  property.  The  report  of 
the  commission  for  1902  gives  the  aggregate  of  rail- 
road interest-bearing  bonds  as  $5,048,811,611.  Fund- 
ing obligations,  such  as  debenture  bonds,  equipment  trust 
certificates,  of  a  temporary  character,  need  not  be  no- 
ticed, being  merely  features  of  current  financing.  In 
other  words,  eleven  per  cent  on  the  investment  is  being 
drained  from  the  country's  production  each  year.  The 
question  is  not  how  long  the  people  will  submit  to  it, 
but  how  long  can  thoy  endure  it?  And  let  it  also  be 
noted  that  this  exorbitant  income  was  extorted  as  fares 
and  freights  while  a  commission  sat,  practically  with 
folded  arms,  notwithstanding  strict  and  comprehensive 
statutory  provisions  giving  it  power  to  declare  exorbi- 
tant rates  to  be  unreasonable.     And  now,  instead  of 

187 


BOSS  ISM    AND    MONOPOLY 

striking  at  the  root  of  the  evil,  it  is  proposed  to  enact 
more  "  regulations." 

In  1904  the  railroads  earned  $9,258  gross  per  mile, 
and  $3,133  net  per  mile.  Now  this  net  result  is  reached 
after  deducting  rentals,  amounting  to  a  vast  sum  im- 
possible of  ascertainment,  included  in  operating  ex- 
penses, most  of  which  was  distributed  as  dividends  to 
stockholders  of  leased  lines.  But,  disregarding  that 
obvious  concealment,  and  allowing  $30,000  per  mile — 
a  liberal  estimate — as  the  cost  of  constructing  and 
equipping  the  roads,  here  is  an  annual  net  profit  of 
over  ten  per  cent  on  an  investment  which  is  safer  than 
any  other  that  can  be  found ;  safer  than  in  improved 
real  estate  in  the  cities,  which  pays  its  owners,  on  an 
average,  not  more  than  four  per  cent  net;  as  safe  as 
Government  bonds,  which,  at  two  per  cent,  sell  at  a 
premium.  Such  an  advantage  given  to  a  single  line  of 
business,  wherein  such  a  large  proportion  of  the  coun- 
try's capital  is  invested,  is  already  beginning  to  be  felt 
by  all  other  lines  of  business,  and  will  hereafter  be  felt 
more  and  more.  The  advantage  is,  as  is  already  shown, 
increasing  year  after  year. 

There  is  now  a  deep-seated  general  and  false  theory 
relative  to  the  basis  of  transportation  rates.  Even  so 
valuable  a  friend  to  the  cause  of  reform  as  Governor 
La  Follette  seems  to  have  accepted  the  perverted  but 
prevailing  view.  In  a  recent  issue  of  the  Saturday 
Evening  Post,  speaking  with  reference  to  the  rights  of 
railroad  companies  in  connection  with  congressional  leg- 
islation, he  says :  "  They  are  entitled  to  such  remunera- 
tion as  will  enable  them  to  maintain  their  roads  in  per- 
fect condition,  pay  the  best  of  wages  to  employees,  meet 
all  other  expenses  incident  to  operation,  and,  in  addition 
thereto,  enough  more  to  make  a  reasonable  profit  upon 
every  dollar  invested  in  the  business."  Now,  while  all 
these  results  of  railroad  operation  may  be  desirable,  it 

188 


OVERCAPITALIZATION 

is  not  the  business  of  Government  to  guarantee  them, 
thus  going  into  the  insurance  business ;  nor  even  "  to 
preserve  all  these  rights  by  the  strongest  protection 
which  the  law  can  afford,"  as  he  suggests  in  the  next 
sentence.  The  Government  should  first  consider  the  in- 
terests of  the  public  and  secure  to  them  reasonable  rates, 
whether  any  profit  remains  upon  the  money  invested  or 
not.  If  private  ownership  will  not  manage  and  operate 
the  property  except  at  a  profit,  and  if  to  insure  a  profit 
a  rate  must  be  exacted  which  is  unreasonable,  it  is  the 
obvious  duty  of  Government  to  do  that  which  is  neces- 
sary to  provide  the  service  at  a  reasonable  rate,  and 
to  that  end  construct  new  plants  with  modern  equip- 
ments, or  take  over  existing  plants  at  their  true  value, 
regardless  of  cost,  such  value  to  be  estimated  with  re- 
gard to  improvements  that  have  been  made  since  their 
construction.  The  learned  gentleman  proves  the  expe- 
diency as  well  as  justice  of  this  measure  of  valuation 
by  the  logical  import  of  his  next  paragraph,  as  fol- 
lows :  "  But  the  public,  each  community  and  every  indi- 
vidual, has  rights  equally  precious.  Upon  the  railway 
companies  rendering  an  adequate  and  important  service 
at  reasonable  rates  all  general  prosperity  is  dependent. 
Deprived  of  these,  every  community  is  checked  and 
limited  in  its  growth ;  every  business  of  whatever  nature 
must  languish  and  fail.  The  denial  of  an  impartial 
service  at  reasonable  rates  is  the  denial  of  equal  oppor- 
tunity, the  denial  of  a  '  square  deal.'  " 

If  increases  of  stock  capitalization,  after  main  lines 
were  built  and  fully  equipped,  were  only  made  to  pay 
for  improvements  and  extensions,  the  people  would  have 
less  cause  for  complaint.  But  it  is  a  common  practice, 
when  dividends  have  increased  to  such  a  point  as  to 
attract  public  attention  and  place  the  stock  far  above 
par,  to  declare  a  stock  dividend — sometimes  twenty-five 
and  at  other  times  as  high  as  fifty  per  cent  of  the  out- 

189 


BOSSISM    AND    MONOPOLY 

standing  issues.  It  is  considered  by  railway  managers 
as  strictly  a  private  and  entirely  legitimate  business 
affair,  with  which  the  public  should  not  concern  itself. 

The  simplicity  of  some  of  the  defenders  of  the  pres- 
ent railroad  systems  and  practices  is  amusing.  Mr. 
McCall,  of  Massachusetts,  in  an  attempt  in  the  House 
of  Representatives  to  refute  the  charge  of  inflation  of 
capitalization,  used  as  part  of  a  vicious  circle  in  argu- 
ment these  words :  "  Why,  the  New  York  Central  Rail- 
road, which  has  been  referred  to,  has  witliin  ten  years 
increased  its  capital  many  millions  of  dollars,  and  has 
received  in  its  treasury  twenty-five  per  cent  more  money 
than  the  par  value  of  the  new  stock  it  issued.  The 
Pennsylvania  Railroad  within  two  years  increased  its 
stock  fifty  per  cent,  and  it  received  in  money  from 
twenty  to  forty  per  cent  more  than  the  stock  it  issued. 
Only  the  other  day  a  great  New  England  railroad 
issued  a  large  number  of  new  shares  and  received  $170 
for  each  share  of  the  par  value  of  $100.  Many  in- 
stances of  a  similar  character  might  be  cited."  Here- 
after the  extraordinary  profits  derived  from  unreason- 
ably high  rates  on  these  roads  will  be  spread  out  to 
cover  the  new  shares  that  the  patrons  who  are  paying 
little  attention  to  railroad  finance,  or  do  not  understand 
it,  may  not  discover  that  rates  are  high,  and  may  not 
become  of  the  class  of  "  agitators  "  for  whom  Mr.  Mc- 
Call has  an  extreme  contempt. 

While,  as  we  have  shown,  there  is  no  inherent  evil 
in  overcapitalization — at  any  rate,  none  making  it  worth 
while  to  discuss  it  as  a  political  question — ^yet  as  a  trick 
or  device  for  concealing  profits — an  office  it  performs 
aside  from  its  stock-jobbing  purpose — it  warrants  con- 
siderable attention.  Men  owning  manufacturing  plants 
worth  millions  have  combined  with  men  controlling 
money  and  securities  worth  other  millions,  and,  without 
adding  a  dollar  to  the  real  wealth  of  the  nation,  have 

190 


■m 


0  VERCA  PITA  LIZA  TION 

capitalized  the  new  association,  thus  created,  at  several 
times  the  actual  value  of  the  aggregations,  partly  in 
bonds  and  partly  in  stock,  and  are  extorting  profits 
from  the  consuming  public  and  disbursing  them  in  the 
form  of  dividends  on  an  enormous  amount  of  fictitious 
capital.  But  this  gigantic  imposition  is  of  the  same 
character  as  that  inherent  in  railroad  financiering  al- 
ready so  fully  described.  To  ascertain  the  full  extent 
of  the  injustice  done  the  people  in  the  matter  of  retail 
prices  of  what  they  buy  from  merchants,  both  imposi- 
tions, those  of  the  railroads  and  those  of  the  manu- 
facturing trusts  are  to  be  added. 

Newspaper  writers  either  do  not  comprehend  or 
they  misrepresent  the  true  significance  of  a  new  issue 
of  railroad  securities.  Recently,  when  President  Har- 
riman,  of  the  Union  Pacific,  obtained  consent  of  the 
stockholders  of  that  company  to  issue  $100,000,000 
preferred  stock,  a  leading  San  Francisco  morning  paper 
editorially  congratulated  the  people  of  the  States,  de- 
pendent, in  whole  or  in  part,  upon  that  road  for  trans- 
portation, upon  the  success  that  had  crowned  Mr.  Har- 
riman's  effort.  The  editor  assumed,  of  course,  that  the 
burdens  of  an  indebtedness,  or  liability,  created  by  a 
common  carrier,  and  its  inseparable  annual  charges, 
are  matters  which  concern  the  company  and  its  stock- 
holders only.  After  stating  that  no  hint  was  given  out 
at  the  meeting  as  f^o  the  purpose  of  the  new  issue,  he 
conjectured  that,  among  other  possibilities,  the  Sierra 
Nevada  Mountains  would  be  tunneled  at  a  cost  of  from 
ten  to  twenty  millions  of  dollars,  thus  dispensing  with 
the  cost  of  maintaining  snowsheds,  etc.  Incidentally, 
this  indicates  an  early  consolidation  of  the  Union  Pacific 
and  Southern  Pacific  properties,  because  the  Central 
Pacific,  part  of  the  Southern  Pacific  system,  crosses  the 
Sierras,  while  the  Union  Pacific  does  not  touch  them. 
In  this  connection  it  is  to  be  noted  that  the  Southern 

191 


BOSSISM   AND    MONOPOLY 

Pacific,  also  under  the  control  of  Harriman,  recently 
issued  and  marketed  refunding  bonds  of  the  face  value 
of  over  ,$160,000,000.  Now,  preferred  stock,  while  not 
a  lien  on  the  property  of  a  company,  is  practically  a 
lien,  to  the  extent  of  specified  dividends,  upon  net 
earnings.  In  this  respect  the  preferred  stock  issue  is 
worse  for  the  people  dependent  upon  the  company  for 
transportation  than  would  have  been  a  bond  issue  for 
the  same  amount  and  having  interest  equal  to  the  divi- 
dends pledged  to  be  paid  on  the  preferred  stock,  because, 
when  the  interest  is  not  paid,  the  bondholders  foreclose 
and  take  the  property  for  the  debt.  In  that  case  there 
would  merely  be  a  change  of  ownership  and  an  extin- 
guishment of  the  interest  charge,  which  would  make  no 
particular  difference  to  the  patrons ;  whereas,  though 
the  holders  of  preferred  stock  cannot  foreclose,  yet  the 
dividend  charge  may  run  on  forever. 

But  here  we  see  all  this  $260,000,000  and  this 
annual  charge  fastened  upon  the  people  of  the  States 
and  Territories  traversed  by  these  railroads  without 
their  consent.  No  doubt  the  $100,000,000,  or  what- 
ever sum  is  obtained  for  the  Union  Pacific  issue,  will 
be  used  for  improvements  (called  betterments)  and  ex- 
tensions, which  may  be  indirectly  a  convenience  to  the 
patrons.  The  improvements  may  also  reduce  operating 
expenses,  but  that  will  never  cause  a  reduction  in  fares 
and  freights.  So,  in  sum  and  substance,  the  transac- 
tion simply  amounts  to  this:  that  Mr.  Harriman,  for 
the  immediate  improvement  of  the  property  of  himself 
and  a  few  other  individuals,  has  mortgaged  its  future 
profits ;  that  is  to  say,  the  future  profits  of  the  industry 
and  business  of  all  the  people  compelled  to  use  these 
roads  as  common  carriers.  For  instance,  he  uses,  we 
will  say,  $20,000,000  to  construct  a  tunnel,  in  order 
that  he  may  save  expense  and  reduce  time.  While  that 
may  be  a  public  convenience,  the  real  motive  is  the  fore- 

192 


OVERCAPITALIZATION 

stalling  or  outstripping  of  a  competing  road,  and  the 
more  securely  buttressing  of  his  monopoly,  which  also 
signifies  not  a  reduction,  but  the  maintenance— prob- 
ably an  increase — of  rates.  For  the  same  strategic  and 
strictly  private  reasons  some  of  the  $100,000,000  will 
be  expended  in  the  construction  of  extensions  and  branch 
lines  through  sections  in  which  they  will  at  first  be 
operated  at  a  loss.  Such  losses  must  be  made  good 
through  higher  rates  imposed  upon  the  patrons  in  the 
more  densely  settled  sections  where  the  existing  road 
has  a  monopoly.  Thus  the  people  along  the  present 
lines  of  Mr.  Harriman's  roads  will  not  be  benefited,  but 
both  themselves  and  their  posterity  will  be  considerable 
losers  by  Mr.  Harriman's  haste  to  gratify  his  inordi- 
nate ambitions  as  a  railroad  king.  How  much  better 
it  would  have  been,  in  view  of  these  subsequent  develop- 
ments, if  the  Government  in  1897  had  foreclosed  its 
lien  upon  these  roads.  The  difference  is  that,  in  that 
case,  these  roads  would  now  belong  to  all  the  people 
and  no  .$240,000,000  inflations  would  be  needed ;  where- 
as, the  people  now  belong  to  the  roads  and  must  submit 
to  such  inflations. 

This  is  but  one  illustration  of  the  methods  by  which 
all  the  railroads  have  been  and  are  being  "  financed." 
New  issues  to  the  amount  of  $550,000,000  were  mar- 
keted during  the  first  four  months  of  1905,  and  more 
were  in  prospect.  The  railroad  policy  appears  to  be 
to  expand  credit  in  the  process  of  consolidation  and  con- 
centration of  management  during  this  period  of  business 
activity'  in  preparation  for  the  period  of  financial  de- 
pression which  they  clearly  foresee,  whether  the  people 
generally  do  or  not.  The  oligarchy  is  determined  that 
there  shall  be  no  rate-cutting,  receiverships,  or  loss  of 
interest  and  dividends  during  the  next  depression,  as 
from  1893  to  1898,  no  matter  what  fate  overtakes 
other  business. 

193 


BOSSISM    AND    MONOPOLY 

It  is  generally  believed  in  Wall  Street  that  the  re- 
funding of  the  Southern  Pacific  bonds  at  this  time  is 
a  step  toward  putting  its  common  stock  on  a  dividend 
basis.  Very  likely.  But  people  are  giving  themselves 
no  concern  about  this  transaction.  They  will  postpone 
their  kicks  until  freight  and  passenger  rates  are  raised 
to  pay  these  dividends ;  but  then  some  wise  court  or  court 
commissioner  will  decide  that  the  stockholders  are  en- 
titled to  a  "  reasonable  return  on  their  investment." 
Of  course  the  road  was  built  and  equipped  out  of  Gov- 
ernment subsidy  and  from  the  proceeds  of  the  original 
issue  of  bonds,  the  stock  being  pure  bonus  to  the  pro- 
moters. 

Recurring  again  to  the  latest  report  of  the  Inter- 
state Commerce  Commission,  we  find  the  total  of  net 
earnings  for  the  year  ending  June  30,  1902,  to  have 
been  $605,616,795;  but  these  figures  are  not  analyzed 
to  show  what  portion  of  this  sum  was  paid  to  stock- 
holders and  what  portions  were  otherwise  paid.  But 
the  total  for  the  year  ending  June  30,  1901,  is  analyzed 
(page  74),  and  is  fairly  representative  of  years  pre- 
ceding and  subsequent.  Of  course  a  comparison  of  the 
total  for  that  year  with  that  of  the  succeeding  year 
shows  in  a  clear  light  the  continual  and  enormous  in- 
crease from  year  to  year  of  the  net  income  from  pri- 
vate ownership  and  control  of  the  roads,  such  increase 
for  that  single  year  having  been  $47,488,028,  and  the 
aggregate  equivalent  to  eleven  per  cent  upon  the  in- 
vestment (estimated  at  $5,000,000,000).  Now,  again, 
taking  the  aggregate  of  net  earnings  for  1901,  we  note 
that  it  is  merely  the  net  income  from  operation,  and 
that  it  does  not  include  other  resources.  For  instance, 
leases  of  roadbeds  to  other  companies  (.$111,637,907), 
stocks  of  other  corporations  owned  by  the  railroad  com- 
panies, for  instance.  Standard  Oil  stocks,  packing-house 
stocks,    construction-company    stocks,    stocks    of    other 

194 


OVERCAPITALIZATION 

railroad  companies,  etc.  ($28,822,788),  interest  on 
bonds  owned  ($12,055,312),  and  miscellaneous  income 
($27,230,442),  aggregating  $179,746,449.  Adding 
this  to  $558,128,767,  we  have  as  net  income  $737,- 
875,216.  For  the  year  1902  the  commissioners  give 
$605,616,795  as  the  net  earnings  from  operation  alone, 
but  do  not  give  the  income  from  those  other  sources. 
Supposing  them  to  have  been  the  same  as  in  the  pre- 
ceding year — and  they  were  undoubtedly  much  more — 
we  have  a  grand  aggregate  of  profit  from  railroad 
control  for  1902  of  $885,363,244.  The  commissioners 
find  that  all  disbursements  from  total  net  income  for 
1901,  on  accounts  other  than  as  dividends,  were  $496,- 
363,898,  leaving  to  be  disbursed  in  the  name  and  form 
of  dividends,  or  available  for  surplus,  $241,511,318. 
But  the  commissioners  do  not  proceed  at  this  point,  as 
they  should,  to  inform  the  public  what  portions  of  this 
larger  sum  really  went  to  pay  dividends.  Though  dis- 
bursed and  received  under  other  designations,  an  inves- 
tigation would  disclose  that  a  very  considerable  sum 
should  be  taken  from  the  larger  and  added  to  the  lesser 
of  these  two  sums.  For  Instance,  the  Hill-Morgan  syn- 
dicate, comprising  a  combination  of  the  Northern  Pacific 
Railroad  and  Great  Northern  Railroad,  otherwise 
known  as  the  Northern  Securities  Company,  take  over 
the  great  Burlington  system,  Issuing  to  the  stock- 
holders of  that  company  two  dollars  in  four-per-cent 
bonds  for  each  dollar  of  stock  held  by  them.  This 
interest  is  paid  semi-annually,  and  is  really  not  Interest 
but  an  eight-per-cent  dividend  on  the  stock  of  the 
Burlington.  The  bonded  indebtedness  proper,  of  the 
Burlington  company  Is  a  separate  and  independent  mat- 
ter. It  is  not  claimed  that  the  data  and  figures  here 
given  in  regard  to  that  deal  are  exactly  correct,  but 
they  are  approximately  so  and  fairly  representative  of 
numerous    others   in   the    gigantic    scheme    of    railway 

195 


BOSSISM    AND    MONOPOLY 

finance.  So  when,  upon  a  consolidation  scheme,  the 
parent  company  absorbs  subsidiary  companies,  a  lump 
sum  is  often  paid  to  the  latter  as  rental,  and  is  divided 
among  the  stockholders  of  the  latter  in  the  form  of 
dividends.  Such  rentals,  though  not  appearing  as  such 
in  the  report  of  the  Interstate  Commerce  Commission, 
because  not  reported  to  it  as  such,  nevertheless  repre- 
sent dividends  pure  and  simple.  And  altogether  a 
thorough  investigation,  such  as  it  is  the  duty  of  that 
body  to  make,  would  disclose  that  a  very  large  propor- 
tion of  the  sum  given  as  disbursements  for  other  pur- 
poses than  as  dividends  are  really  made  upon  stock. 
The  "  bonds "  issued  upon  stock  deposits,  amounting 
in  the  aggregate  to  $600,000,000,  are  for  all  practical 
intents  and  purposes  stock  certificates,  the  "  interest  " 
paid  on  them  being  in  reality  dividends.  The  same  is 
true  of  disbursements  in  the  form  of  rentals,  also  being 
considerable  in  amount.  In  all  such  cases  the  lesser 
companies  have  disappeared  from  the  railroad  world  as 
operating  companies.  As  a  rule,  the  lessee  companies 
alone  make  reports  and  have  their  stocks  dealt  in  on 
the  exchanges.  And  the  same  is  true  where  the  stocks 
of  a  merged  company  have  been  deposited  in  trust  to 
secure  bonds,  as  in  the  case  of  the  Chicago,  Burlington 
&  Quincy.  It  is  well  to  understand  these  facts,  in  view 
of  the  fact  that  they  are  usually  evaded  or  overlooked 
by  writers  and  speakers  on  this  subject,  who  endeavor 
to  show  that  the  railroad  owners  of  the  country  are 
only  receiving  a  "  reasonable  return  upon  their  invest- 
ments." 

The  Industrial  Commission,  in  its  report  submitted 
to  Congress,  December,  1901,  stated:  "Summarized, 
we  conclude  that  the  advance  in  the  published  freight 
rates  upon  all  the  railroads  of  the  country  is  probably 
not  less  than  twenty-five  per  cent."  This  report  was 
made  to  Congress  after  a  prolonged  investigation.     It 

196 


OVERCAPITALIZA  TION 

had  reference  to  the  increase  since  1897.  During  that 
period  of  four  years  the  increased  rates  upon  coal  alone 
amounted  to  over  $100,000,000 ;  nor  have  they  since 
decreased. 

By  the  increase  of  rates  of  transportation  the  cost 
of  living  has  been  greatly  increased  during  a  period 
when  the  greater  volume  of  traffic  and  improvements 
in  the  mechanism  of  railway  service  should  have  caused 
a  considerable  decrease  in  rates.  The  improvements 
consisted,  among  other  things,  in  the  increased  quantity 
and  weight  that  could  be  carried  in  each  car,  as  well 
as  in  the  increased  power  of  locomotives,  whereby  a 
greater  number  of  cars  could  be  hauled.  The  cost  of 
the  service  was  also  reduced  by  the  elimination  or  re- 
duction of  curves  and  grades.  It  will  be  noted  that 
these  improvements  simply  added  to  the  wealth  owned 
by  the  companies,  and  should  have  been  paid  for  out 
of  the  surplus  of  income  after  the  interest  on  the  bonded 
indebtedness  was  paid;  but,  instead,  they  were  charged 
as  "  operating  expenses,"  and  most  of  the  surplus  used 
to  pay  dividends.  As  showing  how  little  just  cause 
there  was  for  the  great  increase  of  rates,  the  following 
facts  and  figures  are  significant:  Each  locomotive  now 
carries  51,265  tons  of  freight,  whereas  in  1897  it  hauled 
only  36,362  tons;  and  the  capacity  of  cars  has  in- 
creased at  least  twenty  per  cent.  All  admit  that  a  fair 
basis  of  estimate  is  by  the  freight-train  mile.  In  1897 
the  average  revenue  for  each  freight-train  mile  was 
$1.63;  in  1902  it  was  $2.44.  In  partial  justification 
for  the  great  increase  of  rates  it  is  alleged,  and  reiter- 
ated over  and  over,  that  the  increase  has  been  made 
necessary  on  account  of  an  increase  of  the  cost  of  labor. 
But  investigation  has  shown  that  the  principal  increase 
has  been  in  salaries  rather  than  wages.  The  average 
increase  outside  the  official  force  does  not  exceed  five 
per   cent,   whereas   the   salaries   of  the   general    officers 

197 


BOSSISM    AND    MONOPOLY 

were  increased  over  seventeen  per  cent,  and  of  other 
officers  over  nine  per  cent. 

The  official  salary  rolls  are  a  great  tax  upon  the  re- 
sources of  the  roads,  and,  of  course,  come  out  of  the 
pockets  of  the  patrons.  A  number  of  salaries  reach  the 
$100,000  mark.  A  man  must  be  well-nigh  indispensable 
to  be  entitled  to  twice  the  salary  of  the  President  of 
the  United  States.  Then  there  are  scores  who  receive, 
by  their  own  votes  and  those  of  other  highly  salaried 
officials,  $75,000,  $50,000,  and  $40,000  per  annum. 
Below  that,  at  from  $5,000  up  to  $25,000,  is  an  army 
of  relatives  and  dependents  of  the  directors. 

To  form  a  proper  conception  of  the  magnitude  of 
the  gains  of  railroad  finance  compare  them  with  those 
of  all  the  big  industrial  combinations  of  the  country. 
With  less  than  one-third  as  much  capital  as  that  in- 
vested by  industrial  trusts,  the  railway  trusts  now  have 
available  for  dividends  $250,000,000  per  annum,  while 
the  manufacturing  trusts  combined  have  only  about  the 
same  sum. 

In  the  contemporaneous  increase  of  facilities  for 
transportation  by  rail  and  the  increase  of  rates  is  ex- 
hibited in  bold  relief  the  vicious  power  of  that  monopoly 
and  the  unscrupulous  exercise  of  that  power.  Cars  of 
greater  capacity,  better  tracks,  and  more  powerful  en- 
gines are  simply  augmentations  of  the  supply  of  trans- 
portation. The  cotton  growers  of  the  South  realize  but 
little,  if  any,  more  money  in  the  aggregate  from  a  large 
crop  than  from  a  small  crop.  And  it  is  so  in  many 
other  branches  of  productive  industry.  Not  so  with 
this  monopoly.  With  enormously  increased  facilities 
for  supplying  the  commodity,  transportation,  in  which 
they  deal,  they  are  yet  able  to  enhance  the  price  to  the 
purchasers  at  will. 

About  the  same  date  upon  which  the  President  was 
delivering  his  Denver  address,   Mr.   Morton,   Secretary 

198 


OVERCAPITALIZA  TION 

of  the  Navy,  addressing  the  International  Railway 
Congress,  and  assuming  to  speak  for  the  President, 
said :  "  Railroad  freight  rates  in  the  United  States  are 
low.  No  other  country  has  any  such  cheap  carriage 
of  goods.  There  are  few  complaints  of  rates  in  this 
country  because  they  are  too  high.  Complaints  of  ex- 
tortionate rates  are  the  exception,  not  the  rule.  .  .  . 
It  has  been  my  observation  that  complaints  of  unrea- 
sonable rates  to  railroad  men  always  receive  prompt  and 
satisfactory  attention.  While  in  a  sense  railroad  trans- 
portation is  a  natural  monopoly,  in  a  broader  sense  It 
is  all  competitive.  Market  competition  prevails  every- 
where, and  is  always  the  controlling  force  in  rate- 
making."  On  the  same  day,  before  the  Interstate  Com- 
merce Commission,  in  session  at  Chicago,  were  being 
made  the  most  startling  revelations  of  extortion  by  the 
Southern  Pacific  and  Santa  Fe  roads,  by  which  the 
fruit  production,  both  deciduous  and  citrus,  of  Cali- 
fornia had  been  rendered  unprofitable,  owing  to  rates 
that  were  almost  prohibitory  and  confiscatory,  despite 
numerous  complaints  and  protests  extending  over  many 
years. 

A  principal  reason  for  there  not  being  more  numer- 
ous complaints  that  rates  are  too  high  is  that  those 
really  injured  by  them  are  purchasers  at  retail  and 
consumers  who  do  not  immediately  see  the  effect.  It  is 
a  few  cents  here  and  a  dollar  or  a  few  dollars  there, 
the  hundredth  of  a  cent  in  a  yard  of  cloth,  a  hundred 
dollars  in  a  threshing  machine,  etc.  The  shipper  of  a 
farm  product  usually  has  little  interest  in  the  freight 
charges  upon  what  he  produces.  A  local  merchant  or 
speculator  fixes  the  price  he  pays,  less  the  rate.  A 
manufacturer,  wholesaler,  or  jobber  fixes  his  price  with- 
out regard  to  charges  for  transportation.  In  the  latter 
cases  the  retailer  adds  the  cost  of  transportation  to 
the  price. 

14  199 


BOSS  ISM    AND    MONOPOLY 

It  Is  true  that  transportation  costs  a  great  deal  less 
than  years  ago,  but  that  does  not  prove  that  it  is  cheap. 
The  moment  the  power  to  fix  the  price  of  any  article 
has  been  allowed  to  vest  in  one  man,  or,  what  amounts 
to  the  same  thing,  in  a  few  men  acting  as  one,  it  begins 
to  be  dear.  The  question  is  not  entirely  whether  the 
railroad  managers  have  made  the  service  cheap  or  dear 
in  the  past  and  present,  but  it  is,  what  will  they  do  when 
they  have  more  firmly  than  at  present  concentrated  the 
management  and  completed  the  process  of  consolidation 
now  rapidly  being  perfected?  Such  a  tendency  never 
moves  backward,  but  always  forward,  as  it  has  been 
moving  for  tM'enty  years.  When  one  has  a  perfect  mo- 
nopoly of  an  article,  he  places  just  such  money  valua- 
tion upon  it  as  he  sees  fit,  and  usually  places  upon  it  a 
valuation  which  will  in  the  aggregate  yield  the  greatest 
profit.  A  few  years  ago.  President  Andrews,  of  Brown 
University,  said :  "  When  a  commodity  is  turned  out 
under  such  conditions,  cost  no  longer  regulates  the  price. 
This  is  done  quite  arbitrarily  for  a  time,  the  seller  then 
being  perhaps  sobered  a  little  by  his  memory  of  old 
competitive  rates.  Slowly  caprice  gives  way  to  law; 
but  it  is  a  new  law,  that  of  man's  need.  Prices  go 
higher  and  higher,  till  demand,  and  hence  profit,  begins 
to  fall  off;  and  they  then  play  about  the  line  of  cost. 
The  producer  can  be  more  or  less  exacting,  according 
to  the  nature  of  the  product.  If  it  is  a  luxury,  the  new 
law  may  not  greatly  elevate  the  price  above  the  old 
notch.  If  it  be  a  necessity,  it  may  bleed  people  to 
death."  This  is  just  what  we  see  in  the  railroad  world 
to-day.  Transportation  being  a  necessity,  as  consolida- 
tion and  combination  progresses  rates  are  gradually 
increased. 

In  justification  for  the  increase  of  rates  and  fares,  it 
has  been  argued  that  the  companies  should  be  permitted 
during  periods  of  prosperity  to  lay  aside  increased 
V  200 


OVERCAPITALIZA  TION 

profits  against  a  future  day  when  it  will  be  impossible 
to  earn  such  profits.  But  of  late  years  the  profits  in 
transportation  business  have  been  growing  more  and 
more  stable,  and  that  tendency  is  likely  to  become  more 
and  more  pronounced.  The  same  is  true  with  respect 
to  all  combinations  of  capital,  owing  not  only  to  the 
elimination  of  competition,  but  to  the  increase  of  popu- 
lation and  permanency  of  settlement — that  is  to  say, 
the  difficulties  attending  removal  and  gaining  a  foothold 
in  a  new  place. 

The  people  submit  to  many  hardships  and  much 
pecuniary  exploitation  when  it  cannot  be  directly  seen 
and  felt.  It  is  not  necessary  that  the  exploitation  be 
inflicted  on  dark  nights,  or  that  a  very  dense  coating 
of  subterfuge  be  used.  A  very  thin  veil  of  deception 
has  been  found  ample  for  the  purposes  of  the  railroad 
oligarchy.  The  consumer,  the  buyer  at  retail,  pays  the 
freight,  but  seldom  gives  it  serious  thought.  It  is 
among  the  several  small  items  which  go  to  make  up  an 
immense  aggregate  in  the  cost  of  living.  There  is 
scarcely  an  article  into  the  price  of  which  a  transporta- 
tion charge  has  not  entered,  sometimes  one,  but  usually 
several  such  charges.  Take  any  article  of  hardware 
for  illustration.  It  has  been  shipped  by  the  miner  to 
the  mill,  from  the  mill  thence  to  the  manufacturer, 
thence  to  the  jobber,  thence  to  the  wholesaler,  and  thence 
to  the  retailer.  By  the  time  it  reaches  the  final  pur- 
chaser it  has  paid  freight  five  times,  all  the  accumulated 
charges  being  paid  by  him.  The  same  history  could  be 
told  of  almost  all  articles  of  everyday  consumption,  as 
well  as  those  of  permanent  use,  whether  the  original 
form  be  wood,  metal,  wool,  cotton,  silica — whatever  the 
form. 

Just  think  of  the  saving  to  the  people  in  the  way 
of  cheapened  freights  and  fares  and  charges  for  tele- 
graphing under  government  ownership.     Hundreds  of 

201 


BOSSISM    AND    MONOPOLY 

millions  in  excess  of  reasonable  charges  drawn  from 
every  railway  station  and  from  the  purse  of  every  citi- 
zen to  the  coffers  of  men  already  so  rich  that,  no  matter 
how  extravagantly  they  live,  they  can  spend  but  a 
fraction  of  their  incomes. 

It  would  be  natural  to  suppose  that,  since  railroad 
managers  insist  upon  their  business  being  considered 
private,  and  hence  beyond  the  pale  of  Government  regu- 
lation, an  era  of  liquidation  would  be  reached  by  which 
railroad  indebtedness  would  be  reduced.  But  the  policy, 
tendency,  and  practice  is  to  expand  and  increase  the 
bonded  indebtedness.  It  has  gone  on  increasing  from 
year  to  year  from  the  beginning  of  railroad  construc- 
tion in  this  country  to  the  present.  Now  it  is  easy  for 
the  eulogists  of  the  present  management  to  impress  a 
credulous  public  with  a  belief  that  it  is  for  the  public 
good  that  railroad  indebtedness  should  increase.  They 
say  that  extensions  and  improvements  are  constantly 
being  made  which  would  be  impossible  out  of  the  cur- 
rent net  earnings.  If  the  hundreds  of  millions  now 
taken  annually  as  dividends  on  stocks  which  represent 
no  original  investment  were  devoted  to  extensions  and 
betterments,  not  only  would  these  be  paid  for,  but  a 
surplus  would  remain  to  be  applied  to  the  principal  of 
bonded  indebtedness.  As  it  is,  the  dividends  paid  are 
so  much  money  taken  out  of  the  earnings  and  converted 
to  private  use,  and  an  equivalent  sum  is  saddled  upon 
the  people  in  the  form  of  an  interest-bearing  indebted- 
ness. Thus  the  railroads  in  1902,  by  the  jugglery  of 
railway  finance,  borrowed  from  Rockefeller,  Morgan  & 
Co.  at  least  $241,000,000,  and  immediately  paid  the 
money  so  borrowed  over  to  them  as  stockholders  in  the 
form  of  dividends.  And  the  patrons  of  the  roads  are 
to-day  paying  interest  on  that  money.  By  that  process, 
railroad  indebtedness  will  increase  at  the  rate  of  over 
$2,000,000,000  each  decade,  and  the  wealth  of  the  few 

202 


O  VERCA  PITA  LIZA  TION 

who  have  become  owners  of  the  railroads  is  increasing 
correspondingly  from  this  source  alone. 

But  they  say  that  the  properties  are  being  im- 
proved and  rendered  more  valuable  and  more  efficient. 
That  is  true,  and  knowledge  of  the  fact  would  give  a 
great  deal  more  pleasure  to  the  people  if  it  were  their 
property.  The  true  aspect  of  this  suggestion  from  the 
present  ownership  should  evoke  from  the  people  of  this 
country  a  retort  to  the  following  effect:  You  have 
acquired  this  property  with  money  which  you  have  bor- 
rowed, and  which  is  now  practically  a  public  charge, 
we  paying  the  interest.  Instead  of  using  a  portion  of 
net  earnings  from  the  use  of  the  properties  to  reduce 
the  indebtedness,  you  claim  and  appropriate  to  your- 
selves what  remains  after  paying  the  interest.  Since 
you  own  the  property,  you  might  at  least  improve  it 
to  the  extent  of  the  surplus  remaining  after  paying  in- 
terest. But  you  prefer  to  grasp  the  surplus  as  a  naked 
bonus — not  a  legitimate  profit — of  ownership.  You 
refuse  to  devote  even  the  profits  of  the  business  to  the 
improvement  of  your  property.  We,  the  people,  must 
foot  the  bills  for  these  improvements;  must  borrow  the 
money  for  that  purpose  through  your  agency,  prac- 
tically from  you.  In  short,  the  people  must  bear  all 
the  burdens  and  risk  of  losses  of  ownership,  must  stand 
as  sureties  against  the  possibility  of  loss  by  you  as 
owners  at  all  times.  And  yet,  when  there  is  a  profit, 
we  have  not  even  the  poor  privilege  of  having  it  de- 
voted either  to  the  reduction  of  the  interest  charges 
which  you  have  saddled  on  us,  or  to  needed  extensions 
and  improvements.  Therefore,  we  propose  to  have  a 
final  settlement  of  the  account  and  a  radical  change  of 
the  system.  We  at  least  have  the  advantage  of  hold- 
ing the  sovereign  ownership,  and  through  that  can  ascer- 
tain the  true  value  of  your  interest  in  the  property, 
pay  that  value,  and  become  owners  instead  of  insurers. 

203 


BOSSISM    AND    MONOPOLY 

Taking  all  the  risks  and  having  all  the  burdens  of 
ownership,  footing  all  the  bills  of  management,  without 
being  consulted  as  to  what  liabilities  shall  be  incurred 
or  to  limit  their  amount,  we  will  exercise  our  reserved 
right  to  become  the  real  owners. 

The  people  should  study  more  this  relation  of  in- 
surers, into  which  they  are  forced  by  the  logic  of  the 
situation,  and  strive  to  grasp  its  true  significance. 
Railway  magnates  and  the  attorneys  and  courts  hold- 
ing subservient  views  declare  that  the  stockholders  are 
entitled  to  enforce  rates  high  enough  to  pay  operating 
expenses  and  a  reasonable  return  or  profit  on  the  invest- 
ment in  addition.  While  it  is  not  true,  as  just  shown; 
that  the  present  owners  have  made  any  original  invest- 
ment, let  us  assume  for  the  present  purpose  that  they 
have.  Then  why  say  that  they  are  entitled  to  exact 
such  rates  as  will  give  a  return  upon  the  investment, 
regardless  of  whether  the  proposed  rates  be  reasonable 
or  unreasonable,  or  are  lightly  borne  by  the  patrons,  or 
are  burdensome.''  Does  any  government  guarantee  to 
any  merchant,  farmer,  or  any  individual,  a  profit  ?  Does 
it,  in  addition  to  perpetuating  a  monopoly  of  business 
in  the  hands  of  any  business  man,  compel  those  who 
must,  by  reason  of  his  monopoly,  buy  of  him  to  pay 
any  high  price  he  may  fix  in  order  that  he  may  realize 
a  profit.?  And,  finally,  does  it  compel  the  public  to  bor- 
row money  and  assume  the  real  burden  of  repayment  in 
order  that  an  individual  may  extend  his  business  and 
improve  his  plant.''  To  ask  these  questions  is  to  expose 
the  folly  and  injustice  of  the  theory  upon  which  the 
courts  now  dispose  of  rate  cases  brought  before  them, 
and  to  show  the  necessity  of  substituting  public  for 
private  ownership. 


204 


CHAPTER    X 

EVILS  OF,  AND  ABUSES  BY,  RAILROADS  IN   PRIVATE  HANDS 

LARGELY    RESPONSIBLE    FOR    STOCK    SPECULATIONS, 

PANICS,    AND    FINANCIAL    DISTURBANCES 

One  among  the  delusions  in  the  pubhc  mind  is  that 
which  pertains  to  the  uses,  movements,  and  control  of 
the  money  of  the  country.  With  most  people,  even 
those  often  designated  as  "  level-headed  business  men," 
the  idea  prevails  that,  at  any  rate,  the  commercial  and 
financial  currents  of  the  country  flow  back  and  forth 
between  the  centers  and  the  outside  unrestrained  and 
unaffected  by  syndicates  and  combinations.  There  are 
manj'  merchants  in  the  smaller  cities  or  country  towns 
who,  hearing  a  rumor  to  the  contrary,  and  an  intima- 
tion that  there  exists  in  this  country  a  money  power 
moving  as  one  man,  and  absolutely  dictating  the  pro- 
portion of  money  that  shall  abide  in  Wall  Street  and 
the  proportion  that  shall  go  out  among  the  outside 
tradesmen  and  farmers  to  harvest  and  move  the  crops, 
and  happening  to  mention  it  to  his  banker,  will  be  in- 
formed that  it  had  its  origin  in  the  brain  of  some  agi- 
tator and  that  it  has  no  basis  in  fact.  He  will  be  likely 
to  flatter  the  vanity  of  the  merchant  by  informing  him 
that  it  is  the  duty  of  the  conservative  and  hard-headed 
business  men  like  himself  to  refute  all  such  utterances 
by  showing  the  statistics  of  deposits  throughout  the 
country,  meaning  thereby  to  convey  the  idea  that  the 
billions  there  shown  are  actually  on  deposit  in  the  banks ; 
also  by  calling  attention  to  the  daily  quotations  show- 
ings loans  and  the  sales  of  stocks  and  bonds  in  New 

205 


BOSSISM    AND    MONOPOLY 

York,  in  open  market,  to  the  amount  of  hundreds  of 
millions  of  dollars ;  also  to  the  reserve  in  the  Federal 
treasury  ready  for  use  in  meeting  any  financial  crises 
that  may  arise.  But  the  fact  is  that  not  only  the  prices 
of  securities,  but  every  movement  and  investment  of 
money,  except  in  the  ordinary  mercantile  course,  is 
either  dictated  directly,  or  indirectly  controlled,  by  a 
few  great  corporations,  insurance  and  trust  companies, 
and  banks,  centered  in  the  Wall  Street  district  of  New 
York  City.  These  institutions  are,  in  their  turn,  con- 
trolled absolutel}'^  by  a  coterie  of  not  more  than  a  dozen 
very  wealthy  financiers.  The  exact  relations  between 
these  men  is,  of  course,  impossible  of  ascertainment,  but 
the  community  of  interest  and  the  vast  financial  power 
of  the  combination  is  clearly  seen  when  the  directorates 
of  the  leading  financial  institutions  and  railroads  of  the 
country  are  examined. 

The  conventional  lie,  intended  to  falsely  impress  the 
people  as  to  their  prosperity  and  incidentally  to  mis- 
lead them  as  to  the  financial  condition  of  the  banks, 
usually  takes  the  form  of  an  assertion  that  the  banks 
"  hold  on  deposit "  such  and  such  a  sum.  Thus,  a  lead- 
ing newspaper  on  April  30,  1905,  said,  in  an  editorial: 
"  The  banks  of  the  United  States  hold  deposits  to  the 
amount  of  $10,449,782,094,"  when  a  true  statement 
would  have  been :  "  The  liabilities  of  the  banks  of  the 
United  States  to  depositors  aggregate,"  etc.,  "  a  very 
small  percentage  of  which  they  would  be  able  to  pay 
if  called  upon."  Another  thing  which  is  never  given 
publicity  is  the  fact  that  these  deposits  are  largely 
those  of  great  corporations,  such  as  railroads,  trusts, 
insurance  companies,  stockbrokers,  syndicates,  industrial 
trusts,  and  of  other  banks  depositing  in  New  York ; 
and  that  in  case  of  a  financial  panic  these  would  be 
the  first  to  withdraw  their  deposits,  leaving  any  assets 
that  were  left  to  be  distributed  among  individual  de- 

206 


PANICS   AND    FINANCIAL    DISTURBANCES 

positors  at  the  fag  end  of  a  long  liquidation.  The  con- 
stant reiteration  of  the  deceptive  statement  about  bank 
deposits  has  excited  the  cupidity  of  adventurers  every- 
where, and  hundreds  of  mushroom  State  and  private 
banks  are  being  started  in  the  cities  and  towns.  Each 
will  have  for  depositors  a  certain  number  of  the  ever- 
credulous  poor  and  a  few  who  are  well  to  do,  and  receive 
a  considerable  sum  total,  to  be  used,  in  many  instances, 
in  stock  and  land  speculations.  By  and  by  a  financial 
squeeze  will  come,  these  concerns  will  be  shaken  down 
by  the  first  wave,  and  the  money  now  represented  as 
being  "  held  on  deposit "  will  be  found  to  consist  of 
stock  certificates  and  deeds  to  real  estate  of  greatly 
diminished  and  rapidly  diminishing  value. 

Since  the  Wall  Street  situation  affects  the  financial 
condition  and  commercial  relations  of  the  whole  country, 
and  since  that  situation  is  one  brought  about  in  great 
part  by  reckless  railroad  financiering  and  the  enormous 
expansion  of  railroad  indebtedness,  it  is  proposed  to 
examine  briefly  the  whole  country's  condition  as  thus 
affected. 

The  perpetual  congestion  of  money  and  concrete 
values  in  Wall  Street  constitutes  a  more  serious  situa- 
tion than  the  mere  power  which  goes  with  it  to  increase 
individual  and  corporate  wealth.  The  enormously  ex- 
tended credit  given  upon  railroad  stocks  and  bonds  as 
collateral  by  banks  and  by  insurance  and  trust  com- 
panies tends  naturally  to  panicky  conditions.  Any 
important  fiscal  legislation  seriously  attempted  at  Wash- 
ington, even  important  administrative  operations,  some- 
times give  rise  to  grave  fears  as  to  the  effect  they  may 
have  upon  the  general  business  of  the  country  as  it 
may  be  influenced  through  the  Wall  Street  stock  mar- 
ket. For  instance,  the  proposition  to  make  a  consider- 
able reduction  in  rates  of  transportation  across  the 
Isthmus  of  Panama,  after  the  transfer  of  the  Isthmian 

207 


BOSSISM    AND    MONOPOLY 

Railroad  to  the  Federal  Government,  gave  rise  to  the 
most  alarming  prophecies  in  the  railroad  press  of  the 
country  as  to  the  disturbing  effect  it  would  have  upon 
the  finances  of  the  transcontinental  railroads  in  compe- 
tition with  it.  One  of  these  stated  the  situation,  and 
gave  vent  to  the  fears  of  those  for  whom  it  stood  spon- 
sor, as  follows :  "  There  are  at  present  outstanding  some 
ten  or  twelve  thousand  millions  of  dollars  of  stocks  and 
bonds  representing  railroad  indebtedness  in  the  United 
States.  Probably  one-third  of  this  vast  sum  is  actually 
invested,  and  to  the  other  two-thirds  values  are  attached 
by  reason  of  the  ability  of  the  managers  to  make  enough 
on  transportation  charges  to  pay  interest  and  dividends. 
The  values  of  these  stocks  and  bonds  are  dependent 
upon  a  reasonable  degree  of  stability  in  existing  charges, 
however  unjust  and  however  extortionate.  To  suddenly 
put  rates  on  the  Panama  Railroad  at  such  figures  as  will 
entirely  and  at  once  disrupt  the  transcontinental  freight 
pool  will  deprive  the  railroads  of  their  ability  to  hold 
railroad  securities  at  their  present  values.  So  seriously 
may  this  impair  their  finances  that  every  dollar  of  the 
vast  sums  just  named  may  be  decreased  to  such  an  ex- 
tent as  to  bring  on  a  serious  financial  panic.  Not  all 
railroads  are  interested  in  the  transcontinental  freight 
pool,  but  the  interests  of  all  are  so  interlocked  that  none 
could  escape  serious  disaster  were  those  directly  so  inter- 
ested severely  crippled  financially." 

So  it  is  seen  that  the  concentration  of  the  country's 
railroad  business  and  finances  in  the  hands  of  the  Stand- 
ard syndicate  makes  a  card  house  out  of  the  nation's 
business.  This  is  a  dangerous  state  of  affairs.  If  the 
Government  owned  the  roads  there  would  be  no  railroad 
securities  except  such  as  the  United  States  stood  back 
of,  and  it  would  not  be  in  the  power  of  any  set  of  finan- 
ciers to  create  anything  more  than  a  slight  and  tem- 
porary depression  or  advance  in  the  values  of  United 

208 


PANICS   AND    FINANCIAL    DISTURBANCES 

States  issues.  There  may  have  been  serious  fluctuations 
in  their  market  prices  in  times  of  war,  but  these  alone 
have  never  been  sufficient  to  disturb  business. 

Thomas  W.  Lawson  has  written  much  on  the  same 
subject;  and  while  his  motives  have  been  questioned, 
and  his  methods  severely  criticised,  the  author  will  not 
be  deterred  from  quoting  him  as  far  as  his  logic  is 
sound  and  his  figures  correct;  nor  will  we  quote  entirely 
to  approve,  but  to  criticise  somewhat.  In  a  signed 
article  in  the  press,  January  20,  1905,  he  said:  "Be- 
fore the  advent  of  the  '  system,'  in  the  year  1880, 
the  total  wealth  of  the  country  was  $40,000,000,000. 
To-day  it  is  $100,000,000,000.  The  total  amount  of 
stocks  and  bonds  in  the  New  York  Stock  Exchange  in 
1880  was  $3,000,000,000.  To-day  it  is  $20,000,000,- 
000.  In  1880  the  amount  of  money  of  the  people  was 
$1,500,000,000.  To-day  it  is  but  $2,500,000,000.  In 
1880  the  amount  of  deposits  in  the  national  and  sav- 
ings banks,  trusts,  and  insurance  companies,  belong- 
ing to  the  people,  was  $3,000,000,000.  To-day  it  is 
$11,000,000,000.  I  have  taken  these  figures  from  the 
ordinary  sources,  Treasury  and  stock  exchange  reports 
and  statistical  works.  Most  of  them  you  can  find  for 
yourselves  in  the  '  World  Almanac'  " 

This  was  the  text  for  a  statement  of  a  situation 
which  has  become  absolutely  alarming;  nor  was  it  an 
overstatement  either.  In  fact,  Mr.  Lawson  scarcely 
goes  far  enough  or  deep  enough.  He  is  entitled  to 
credit  for  reluctance  to  unnecessarily  disturb  business. 
His  plan  for  a  readjustment  is  rather  more  conservative 
and  tedious  than  the  situation  would  seem  to  require. 
Since  his  January  article  was  published,  new  railroad 
securities  to  the  amount  of  $550,000,000,  and  an  equal 
amount  of  "  industrials,"  were  issued  up  to  the  first  of 
May — say  a  round  billion;  this  would  make  $21,000,- 
000,000. 

209 


BOSSISM    AND    MONOPOLY 

In  giving  the  volume  of  the  circulating  medium  he 
omits  to  state  that  an  average  of  $456,000,000  consists 
of  national  banknotes,  which  at  best  are  mere  substi- 
tute or  credit-money  sure  to  disappear  in  the  first  stages 
of  a  financial  squeeze,  when  the  medium  is  most  needed. 
That  leaves  only  $2,000,000,000  available  if  a  crisis 
should  come  which  called  for  a  liquidation  of  accounts. 

Mr.  Lawson  is  too  intelligent  and  well-informed, 
financially  and  otherwise,  not  to  understand  the  under- 
lying principles  of  monetary  science.  He  places  prop- 
erty values  of  the  nation  at  $100,000,000,000.  Whence 
come  these  figures .?  Even  if  possible  to  trace  such 
estimates,  they  would  be  mere  guesswork.  While  dollars 
are  not  measures  of  the  value  of  all  property,  yet  they 
are  the  measures  of  value  of  all  that  must  be  sold. 
Therefore  the  valuation  of  a  nation's  wealth  is  a  rela- 
tive term.  The  nation's  wealth  was  estimated,  as  he 
says,  in  1880,  at  $40,000,000,000.  What  was  it  worth 
in  1894.?  It  was  evidently  worth  much  less,  according 
to  any  available  standard  of  calculation,  than  ten  years 
previously.  Taking  his  figures,  which  certainly  make 
a  bad  enough  showing  without  adding  the  subsequent 
increase,  or  deducting  $346,000,000  of  treasury  notes 
or  $456,000,000  banknotes — which  are,  upon  a  final 
test,  mere  forms  of  credit  like  stocks  and  bonds — we  find 
that  all  the  money  in  the  country  has  been  deposited 
more  than  four  times,  and  that  the  banks  are  indebted 
to  the  people  four  times  the  amount  of  all  the  money 
in  the  country  and  a  billion  dollars  besides ;  and  that,  in 
addition  to  this  indebtedness,  they  must  redeem  on  de- 
mand .$456,000,000 — their  own  issues.  Now,  we  know 
that  of  the  deposits  in  central-reserve  national  banks 
twenty-five  per  cent  is  required  by  law  to  be  kept  in 
their  vaults,  that  certain  percentages  must  be  kept 
in  other  national  banks,  and  that,  under  the  bank- 
ing laws  of  the  various  States,  a  large  sum  is  required 

210 


r 
PANICS    AND    FINANCIAL    DISTURBANCES 

to  be  kept  in  the  vaults  of  these  banks,  that  $150,- 
000,000  constitutes  a  reserve  fund  in  the  United  States 
Treasury.  We  know  that  about  $200,000,000  of  cash 
is  constantly  tied  up  by  insurance  companies,  and  that 
an  amount  that  cannot  be  ascertained,  but  running  into 
the  millions,  is  kept  in  safe-deposit  boxes  and  in  the 
vaults  of  trust  companies.  Then  the  amount  of  the 
practically  circulating  medium  must  be  less  by  several 
hundred  millions  than  the  theoretical  sum  of  $2,500,- 
000,000  given  by  Mr.  Lawson. 

The  loans  of  the  associated  banks  were,  in  February, 
1905,  more  than  twice  as  large  as  they  ever  were  in 
the  same  month  prior  to  1898.  It  took  twelve  years 
prior  to  1897  for  the  loan  account  to  increase  $240,- 
000,000 ;  whereas  in  the  eight  years  since  that  date  loans 
have  expanded  $640,000,000.  During  the  same  eight 
years  the  loans  by  the  New  York  trust  companies  had 
increased  $658,000,000.  Thus  we  have  an  expansion 
of  bank  credits  of  $1,298,000,000  in  eight  years,  as 
against  an  increase  of  less  than  one-fifth  that  amount 
in  the  preceding  twenty  years.  That  this  is  not  a 
world-wide  movement  but  arises  from  conditions  and 
manipulations  peculiar  to  the  United  States  is  seen  by 
a  comparison  with  other  countries.  The  Bank  of  France 
now  has  outstanding  only  $21,000,000  more  loans  than 
in  1897,  the  Bank  of  Germany  only  $18,000,000  more, 
while  the  loan  account  of  the  Bank  of  England  is 
$9,500,000  lower  now  than  then.  These  figures  are  not 
from  Lawson  but  from  the  New  York  Evening  Post, 
an  accepted  authority  in  financial  circles. 

The  railroad  mileage  has  increased  since  1880  from 
115,647  to  200,000  miles  in  1904,  or  85,000  miles,  the 
cost  and  equipment  of  which  was,  allowing  $30,000  per 
mile,  just  $2,500,000,000.  This  would  add  $2,500,- 
000,000  to  railroad  wealth.  It  would  be  difficult  to 
obtain  the  total  capitalization  in  stocks  and  bonds  in 

211 


BOSSISM    AND    MONOPOLY 

1880,  but  it  was  near  $6,000,000,000;  so  that,  while 
only  $2,500,000,000  of  value  has  been  added  in  twenty- 
five  years,  this  has  been  made  the  basis  of  a  railroad 
credit  expansion  of  $6,000,000,000,  issues  of  railroad 
stocks  and  bonds  now  being  about  $12,000,000,000. 
Now  the  banks  have  been  the  real  underwriters  bcliind 
most  of  the  new  flotations  of  railroad  stocks  and  bonds, 
which,  as  here  shown,  have  no  adequate  property  secur- 
ity behind  them.  It  is  true  that  the  underwriter  does 
not  become  the  actual  investor  where  a  flotation  suc- 
ceeds, but  in  some  cases,  especially  in  the  case  of  stocks, 
the  underwriting  syndicate  finds  itself  forced  to  "  make 
good  " — that  is,  to  take  the  stocks  from  the  corporation 
or  promoters  at  the  underwritten  price.  And  in  most 
cases  the  underwriting  banks  must  stand  ready,  in  order 
to  sustain  the  stocks  in  the  market  at  a  price  which  will 
prevent  loss  to  themselves,  to  lend  money  on  the  stock 
up  to  a  few  points  under  the  current  market  price. 
Now  the  latter-day  financier  will  tell  you  that  is  safe 
and  conservative  banking,  and  will  call  attention  to  the 
instances  in  which  it  has  been  done  with  profit  by  banks 
and  other  moneyed  institutions,  with  no  calamitous  con- 
sequences. But  the  custodians  of  the  people's  money 
should  be  able  to  point  to  business  methods  and  prac- 
tices which  will  protect  their  deposits  not  only  while 
the  sun  of  prosperity  shines,  but  in  the  hours  of  storm 
and  stress.  Though  a  given  banker  now  feels  that  a 
loan  of  $9,000  on  100  shares  of  stock,  fluctuating  around 
par  in  the  market,  is  perfectly  secure,  it  is  evident  that, 
if  such  a  panic  should  seize  the  financial  center  as  has 
seized  it  more  than  once  in  recent  history,  it  would  be 
scarcely  any  security  at  all.  For  what  does  the  ordi- 
nary value  of  the  security  matter  when  the  pledgeor  has 
no  money,  and  those  who  do  have  it  are  clinging  to  it  as 
the  sole  anchor  of  financial  salvation.''  Especially  would 
results  be  disastrous  in  all  the  numerous  cases  of  loans 

212 


f 

PANICS   AND    FINANCIAL    DISTURBANCES 

on  the  much-watered  stocks  of  recent  issue,  such,  for 
instance,  as  those  of  the  Southern  Pacific  and  Union 
Pacific  railroads. 

It  will  scarcely  console  the  depositor  in  the  dark 
hour  of  panic,  when  his  New  York  bank  has  failed,  or 
by  reason  of  the  failure  of  a  New  York  bank  his  home 
bank  closes  its  doors,  to  tell  him,  "  Yes,  but  your  money 
was  safely  invested  up  to  this  time,  notwithstanding 
that  you  may  never  get  your  hands  on  it  again."  Nor 
will  it  be  any  satisfaction  to  him  at  such  time  to  be 
reminded  that  Mr.  Rockefeller,  Mr.  Gould,  Mr.  Harri- 
man,  Mr.  Stillman,  and  Mr.  Morgan  had  expressed 
their  individual  opinions  that  prosperity  had  come  to 
stay.  It  is  a  lesson  that  all  should  learn, — better  before, 
than  after  the  crash  that  must  inevitably  come — that 
most  of  that  prosperity  which  is  spelled  out  in  large 
figures,  representing  bank  clearances,  is  mere  manipu- 
lation with  bank  entries ;  that  it  does  not  represent  in 
any  large  part  commercial  transactions,  but  transac- 
tions in  Wall  Street,  a  very  small  percentage  of  which 
are  bona  fide,  being  mostly  fake  sales  made  to  consum- 
mate a  few  genuine  sales  from  the  underwriters  to  the 
public;  that  most  of  our  prosperity  consists  of  expan- 
sions and  contractions  of  bank  credits;  that  the  present 
pace  cannot  continue  indefinitely.  The  awful  crop  of 
real  estate  and  man-mortgages  that  has  been  sown  dur- 
ing the  past  eight  years  will  mature,  and  then  the 
holders  on  the  inside  will  say,  "  The  game  has  now  been 
played  to  the  limit,  and  liquidation  is  in  order.  We 
must  look  beyond  corporate  forms  and  individual  repu- 
tations to  realities."  When  that  day  comes,  as  it  soon 
must,  the  people  will  wake  up  to  the  truth  that  when 
a  corporation  has  property  worth  just  $1,000,000,  with 
bonds  outstanding  of  the  face  value  of  $1,000,000,  then, 
no  matter  how  much  capital  stock  it  has  issued,  whether 
preferred  or  common  or  both,  and  no  matter  the  price 

213 


BOSS  ISM    AND    MONOPOLY 

up  to  which  it  has  been  worked,  the  whole  issue  is  abso- 
lutely of  no  value  in  the  process  of  liquidation.  They 
will  learn,  also,  that  no  matter  how  much  the  figures 
representing  bank  deposits  show,  only  so  much  real 
money  is  actually  held  on  deposit  in  the  banks  as  is 
not  in  circulation  and  held  as  a  reserve  in  the  United 
States  Treasury ;  and  that,  no  matter  how  imposing 
and  impressive  the  figures  setting  forth  a  bank's  re- 
sources, they  are  no  real  concern  of  the  depositor  unless 
and  until  the  test  of  the  ability  of  the  bank  to  refund 
deposits  is  applied. 

All  these  dangerous  expansions  of  bank  credit  are 
based  upon  corporate  stocks,  most  of  them  issued  by 
railroad  companies,  since  loans  are  reluctantly  made  on 
industrials.  No  greater  reform  could  be  introduced  than 
one  which  would  eliminate  all  corporate  stocks  from  our 
bank  finances.  Government  ownership  would  exchange 
Government  securities  of  certain  permanent  and  uni- 
form value,  which  would  be  no  source  of  panic  and 
which  no  panic  would  affect,  for  those  of  uncertain  and 
speculative,  or  of  merely  nominal  value. 

A  panic  does  not  descend  like  a  cloud  of  vapor;  nor 
is  it  prearranged,  until  those  who  have  got  possession 
of  the  man-mortgages  and  the  bank  reserves  are  ready 
for  it.  Then  it  evolves  itself.  Jones  the  merchant 
finds  to  his  surprise  that  his  credit,  previously  good  at 
the  bank  for  a  loan,  is  no  longer  good,  and  that  he  is 
unable  to  pay  his  bill  to  the  wholesaler,  who,  in  his 
turn,  cannot  extend  Jones's  time  for  very  much  the 
same  reason.  The  demands  and  withdrawals  of  accom- 
modation at  the  banks  are  because  of  real,  and  not  simu- 
lated, pressure  upon  them.  But  the  bank  officers  are 
unable  to  explain  it.  It  is  attributed  to  a  "  want  of 
confidence  "  which  is  real  where  it  first  originates ;  and 
it  originates  with  those  who  have  become  deeply  con- 
cerned at  the  extent  to  which  bank  credits  and  corporate 

214 


PANICS   AND    FINANCIAL    DISTURBANCES 

and  individual  liabilities  have  expanded.  Widespread 
panics  and  trade  depressions  do  not  succeed  periods  of 
normal  business  expansion  or  of  moderate  prosperity. 
They  succeed  liigh  tides  of  prosperity,  just  as  a  low- 
water  tide  necessarily  follows  high  tide. 

To  realize  what  will  happen — what  is  now  begin- 
ning to  happen — when  the  banks  can  no  longer  carry 
their  loads  of  paper,  the  function  of  money  as  a  meas- 
ure of  all  values  pressed  for  sale  should  be  considered. 
The  reserve  national  banks  in  New  York  are  required 
by  law  to  hold  twenty-five  per  cent  of  deposits  as  a 
reserve,  but  they  never  hesitate  to  violate  this  law  when 
it  suits  their  purpose  and  convenience.  National  banks 
in  certain  other  cities  must  maintain  a  reseme  of  only 
twelve  and  a  half  per  cent  of  deposits,  and  still  other 
national  banks  of  only  half  the  latter  percentage.  The 
discrimination  in  favor  of  the  outside  banks,  or  against 
the  New  York  banks,  if  the  latter  term  be  preferred, 
in  requirements  as  to  a  reserve,  is  upon  the  theory,  which 
is  the  actual  course  of  business,  that  deposits  in  other 
national  banks  will  very  largely  be  redeposited  in  the 
New  York  banks.  But  that  course  is  not  only  pursued 
by  interior  national  banks,  but  by  most  of  the  interior 
State  and  private  banks.  The  State  and  private  bank- 
ers often  have  no  absolutely  burglar  and  fireproof  re- 
ceptacles, and  therefore  keep  a  very  meager  percentage 
of  deposits  on  hand.  It  thus  results  that  the  liabilities 
of  the  great  national  banks  of  New  York  are  at  all 
times  in  a  situation  of  peculiar  danger  upon  the  ap- 
proach of  a  money  squeeze,  whether  it  occurs  in  New 
York  or  in  any  other  part  of  the  country.  Not  only 
so,  but  when  any  money  stringency  in  any  part  of  the 
country  causes  trouble  for  the  New  York  banks,  that 
trouble  at  once  communicates  itself  to  all  parts  of  the 
country,  because  the  shghtest  danger  will  be  scented  by 
the  trust,  insurance,  and  other  big  depositors  in  the 
15  215 


BOSS  ISM    AND    MONOPOLY 

New  York  banks,  and  they  will  withdraw  in  a  rush 
before  the  individual  depositors  hear  of  any  trouble 
whatever.  The  moment  the  New  York  bank  reserves 
are  trenched  upon  they  must  be  replenished  by  calling 
loans.  Then  stock  securities  are  thrown  on  the  market, 
representing  enormous  sums,  collaterals  shrink  to  but 
little  value,  and  if  the  banks  are  able  to  save  themselves 
from  utter  bankruptcy  at  all,  it  is  by  a  further  and 
more  flagrant  inflation  of  bank  credit  in  the  form  of 
an  immense  issue  of  clearing-house  certificates.  But 
that  device  when  last  resorted  to  (in  1893)  raised  such 
a  storm  of  protest,  and  was  so  clearly  a  confession  of 
insolvency  and  violation  of  the  Bank  act,  that  if  re- 
sorted to  again  it  might  intensify  the  panic,  and  be 
the  shortest  step  that  could  be  taken  to  universal  ruin. 
Mr.  Albert  Griffin,  an  able  financial  writer,  in  an 
article  published  in  Tom  Watson's  Magazine  for  June, 
1905,  said:  "Between  1896  and  1904,  as  officially 
reported,  the  increase  in  the  volume  of  visible  money 
was,  in  millions,  $1,322,000,000,  or  $9.75  per  capita; 
but  the  quantity  of  hocus-pocus  money  in  use  increased 
$5,275,000,000— $43.42  per  capita;  the  quantity  of 
both  kinds  then  actually  in  use  being  $107.63  per 
capita.  This  shows  that  four-fifths  of  the  increase  in 
the  medium  of  exchange  consists  merely  of  the  right 
given  favored  people  to  draw  checks  on  banks,  to  pay 
which  no  real  money  has  been  deposited."  This  writer 
clearly  corroborates  Lawson  as  to  the  use  made  of  the 
money  by  the  people  of  the  United  States,  whether  in 
New  York  banks  or  in  outside  banks.  The  figures  he 
produces  show  that  it  goes  into  great  speculative  under- 
writing schemes  and  the  maelstrom  of  Wall  Street 
speculation  generally,  and  the  depositors  take  all  the 
risk  of  loss  without  any  corresponding  chance  of  profit. 
Further  on,  Mr.  Griffin  truly  says :  "  Less  than  one- 
tenth  of  the  '  deposits  '   in  the  banks  are  real  money, 

216 


PANICS    AND    FINANCIAL    DISTURBANCES 

the  others  being  mere  promises  of  the  banks  to  pay 
money  to  those  who  have  bought  (with  notes)  the  right 
to  draw  checks  against  them — and  it  is  simply  impos- 
sible to  so  regulate  the  system  as  to  prevent  it  from 
frequently  working  disastrously.  The  use  of  hocus- 
pocus  money  and  its  evil  results  have  increased  steadily 
from  the  beginning  of  the  deposit  banking  system. 
From  time  to  time  methods  change,  but  every  change 
increases  the  power  and  profits  of  the  few  and  the  help- 
lessness of  the  many.  The  gravest  of  these  changes 
began  to  be  felt  about  a  decade  ago.  Leading  bankers 
had  always  used  some  of  their  hocus-pocus  money  for 
the  promotion  of  their  own  schemes,  but  from  that  time 
the  Rockefellers,  Morgans,  and  others  have  been  sys- 
tematically getting  control  of  the  principal  deposit 
banking  institutions,  and  using  not  only  a  rapidly  in- 
creasing proportion  of  their  depositors'  real  money  but 
also  more  of  the  hocus-pocus  money  made  possible  by 
those  deposits." 

Speculation  in  stocks  dates  from,  and  has  kept  pace 
in  magnitude  with,  the  watering  of  capitalization  and 
inflation  of  bonded  indebtedness.  There  can,  of  course, 
be  no  great  profits  without  wide  and  rapid  fluctua- 
tions ;  and  the  nearer  the  capitalization  to  the  actual 
value,  the  less  the  variation  in  price  from  day  to  day; 
and  the  ability  to  enhance  and  depress  the  quotations 
from  the  inside  diminishes  as  the  total  volume  of  stocks 
in  the  market  approaches  the  actual  value  of  the  prop- 
erty represented  by  it.  To  furnish  this  power  has  been 
one  motive  for  loading  all  the  railroads  in  the  country 
with  enormously  exaggerated  bonded  indebtedness  and 
watering  the  stocks  to  the  utmost  limit  of  human  credu- 
lity. Another,  and  the  original,  incentive  was  the  con- 
cealment of  extortion  in  fares  and  freights  already  dis- 
cussed. To  illustrate  all  the  vast  high-handed  schemes 
of  Government  looting  and  stockjobbing,  in  proof  of 

217 


BOSSISM    AND    MONOPOLY 

the  foregoing  statements,  would  not  be  practicable.  A 
lifetime  might  be  devoted  to  a  full  development  of  the 
facts,  and  by  the  time  that  was  accomplished  a  thou- 
sand new  instances  would  have  accumulated. 

There  are  what  are  known  as  New  York  Stock  and 
Bond  Exchange  brokers,  and  there  are  brokers  who  deal 
only  in  the  Consolidated  Exchange.  Some  of  the  latter 
are  classed  as  keepers  of  "  bucket  shops."  Probably 
nine-tenths  of  what  is  considered  legitimate  business  is 
transacted  on  the  Stock  and  Bond  Exchange.  We  may 
without  impropriety  designate  the  Stock  and  Bond  Ex- 
change broker  as  regular  and  all  others  as  irregular. 
Then  there  are  brokers  who  deal  exclusively  in  invest- 
ment securities,  and  who,  though  most  of  them  are 
regular,  yet  are  almost  indifferent  as  to  the  market 
conditions,  whether  active  or  inactive,  whether  prices  be 
high  or  low.  Three-fourths  of  the  regulars  are  mere 
room-traders  and  manipulators  who  work  the  Exchange 
as  a  speculative  machine,  very  much  as  any  other  gam- 
bling device  is  worked.  Of  the  typical  room-trader  or 
manipulator,  it  may  be  truthfully  said  that,  no  matter 
what  the  measure  of  his  success  expressed  in  dollars, 
his  success  is  attained  without  adding  anything  to  the 
welfare  of  mankind ;  nor  have  the  efforts  of  himself  and 
all  his  kind  ever  made  an  extra  blade  of  grass  to  grow, 
or  accomplished  any  result  which  might  not  have  been 
omitted  without  loss  to  humanity  at  large.  From  a 
Wall  Street  standpoint  they  are  usually  honest ;  that 
is,  when  they  sell  they  deliver  the  securities,  and  when 
they  buy  they  make  payment;  but  beyond  that  they 
do  not  concern  themselves  in  the  slightest  whether  those 
with  whom  they  deal  get  a  dollar's  worth  or  a  cent's 
worth  for  the  money  poured  into  the  cauldron  of  specu- 
lation by  the  deluded  outside,  whether  it  amounts  to 
hundreds,  thousands,  or  millions. 

The  conspiracies,  corners,  deceptions  formed  and 
218 


PANICS   AND    FINANCIAL    DISTURBANCES 

resorted  to  by  insiders  of  each  of  the  great  railroad 
and  industrial  companies  to  rob  the  credulous  public  is 
a  history  in  itself.  They  have  never  hesitated,  when  it 
suited  their  purpose,  to  undermine  the  financial  stand- 
ing and  make  wrecks  of  prosperous  enterprises,  or  to 
throw  into  the  hands  of  receivers,  without  consulting 
their  stockholders  at  large,  properties  which  the  most 
ordinary  care  and  prudence  could  have  made  earn  in- 
terest and  dividends.  An  instance  in  point  was  the 
great  Reading  system,  which,  early  in  1893,  though  in 
defiance  of  law,  had  obtained  control  of  the  coaling 
business  of  the  entire  country.  Its  stock  had  mounted 
skyward,  when,  one  fine  day  in  January,  the  papers 
announced  that  by  a  midnight  order  a  judge  on  the 
bench,  the  president — ^who  had  brought  about  the  finan- 
cial pinch  justifying  the  receivership,  and  the  largest 
stockholder  in  a  hostile  corporation — had  been  appointed 
receiver  over  it.  In  one  year  the  stock  fell  from  65 
to  15,  and  millions  were  made  by  the  small  circle  who 
were  let  into  the  secret  in  time  to  sell  short  of  the  stock. 
Many  still  remember  with  what  glowing  colors  the 
president  of  the  Santa  Fe  system  pictured  his  trip  to 
London,  for  an  adjustment  of  certain  financial  difficul- 
ties, in  1894.  The  New  York  financial  agents  of  the 
road  confirmed  his  version,  and  a  long  era  of  pros- 
perity for  it  were  frequently  and  confidentially  pre- 
dicted. The  stock  boomed  for  several  days ;  large  blocks 
of  it  were  secretly  unloaded  upon  the  confiding  public  at 
an  advance  of  several  points  caused  by  these  reports. 
The  facts  were  that  his  mission  had  been  a  complete 
failure,  and  he  had  not  shaken  the  dust  of  travel  from 
his  clothes  before  hying  to  the  law  department  of  the 
road  and  having  prepared  all  the  papers  for  a  receiver- 
ship. And  while  the  newspapers  containing  exaggerated 
accounts  of  present,  and  glowing  predictions  of  future 
prosperity  for  the  Atchison,  Topeka  &  Santa  Fe  sys- 

219 


BOSSISM    AND    MONOPOLY 

tern  were  being  sold  on  the  streets,  orders  were  being 
signed  in  judge's  chambers  for  the  hquidation  of  the 
company,  made  necessary  by  its  inability  to  pay  its 
floating  indebtedness.  Fortunes  were  made  out  of  what 
was  looked  upon  by  the  public  as  a  great  misfortune 
and  what  was  ruinous  to  thousands  of  investors  and 
speculators.  These  fortunes  were  coined  from  false- 
hood, fraud,  and  criminal  conspiracy.  The  above  is 
but  a  repetition,  with  slight  variation,  of  scores  of 
others  in  the  railroad  history  of  the  nation. 

But  it  must  not  be  supposed  that  secretly  wrecking 
the  road  is  the  only  scheme  of  inside  jugglery.  Divi- 
dends are  increased  without  any  fact  to  warrant  it  and 
often  when  financial  conditions  demand  a  reduction  or 
suspension  of  dividends.  Money  has  sometimes  been 
borrowed  to  pay  increased  dividends,  and  the  floating 
debt  thereby  created  used  by  the  inside  managers  as  a 
weapon  to  force  the  institution  into  insolvency.  The 
declaration  of  an  increased  dividend  naturally  causes  a 
rise  in  the  price  of  the  stock,  advantage  of  which  is 
taken  by  buying  long  of  it  before  the  rise,  and  after 
the  rise  to  sell  short.  Most  of  the  combinations  and 
pools  that  lie  in  wait  for  the  uninitiated  investor  are 
concealed  from  him  until  he  is  caught  in  the  trap. 

One  attaching  himself  permanently  to  the  stock 
market  usually  becomes  a  Wall  Street  fixture,  and 
ceases  to  be  an  American  citizen  in  spirit  and  purpose, 
because  he  thereby  abjures  all  the  duties  of  citizenship 
and  becomes  a  stranger  to  those  softening  impulses  and 
influences  which  fit  a  man  to  be  a  neighbor  to  his  fellow- 
man.  He  at  once  realizes  that  in  order  to  successfully 
play  at  the  game  of  finance  his  conscience  must  become 
so  thickly  incrusted  with  selfishness  that  no  scene  of 
human  suff^ering  will  stir  his  sensibilities,  nor  any  com- 
punctions induce  him  to  award  restitution  of  anything 
won  at  the  game,  whether  played  fairly   or  unfairly. 

220 


PANICS   AND    FINANCIAL    DISTURBANCES 

He  produces  nothing  but  margins  of  profit  or  loss. 
To  him  all  outside  Wall  Street  is  merely  an  append- 
age. Its  only  use  is  as  a  reservoir  from  which  to  draw 
suckers  with  plethoric  bank  accounts.  For  his  purpose, 
and  as  a  background  for  life's  real  actors,  the  finan- 
ciers, he  tolerates  it,  but  does  not  love  it,  nor  even  admit 
that  it  has  any  rights  which  he  is  bound  to  respect. 
As  for  the  railroads — the  tangible  things — the  places 
they  reach,  the  people  they  serve,  and  how,  and  upon 
what  terms,  the  average  Wall  Street  operator  knows 
little  or  nothing,  nor  does  he  care.  He  leaves  the 
acquisition  and  use  of  such  knowledge  to  the  greater 
financiers  whom  he  in  part  serves.  But  he  strives  to  be 
at  home  on  the  railroad  balance  sheets  and  dividend 
prospects. 

Too  often,  the  broker's  code  of  morahty  is  reflected 
in  his  account  and  bankbook.  So  long  as  he  plays, 
according  to  the  rules  of  the  game,  on  the  right  side  of 
the  criminal  danger  Hne,  he  considers  that  he  has  per- 
formed his  whole  duty  to  God  and  man.  If  he  con- 
ceives the  possibility  of  such  places  as  heaven  and  hell, 
his  conception  of  the  one  is  that  of  a  place  where  vast 
stores  of  individual  wealth  have  accumulated,  and  he 
likens  the  other  to  an  insolvency  court.  The  stranger 
visiting  Wall  Street,  whatever  his  purpose,  needs  no 
credentials  for  doing  business  except  a  bank  account, 
without  which  letters  of  introduction  and  evidences  of 
fair  repute  are  of  no  more  use  than  they  would  be 
among  the  sharks  and  cuttlefish  at  the  bottom  of  the 
ocean. 

The  atmosphere  and  pace  of  the  Stock  Exchange 
is  that  of  a  flying  express  train  which  has  lost  time 
that  must  be  made  up  before  reaching  its  destination. 
This  is  very  proper,  since  the  profits  which  the  train 
earns  for  its  company  contribute  to  the  vast  sum  of 
net   earnings    for   which   the   denizens   of   Wall    Street 

221 


BOSSISM    AND    MONOPOLY 

struggle  during  waking  hours  and  about  which  they 
dream  the  rest  of  the  time.  The  crowds  of  outside 
investors,  the  grand  armies  of  the  pubHc,  which  daily 
file  their  ways  into  Wall  Street,  are  urged  through 
various  agencies  to  buy  when  they  ought  to  sell,  and 
to  sell  when  they  ought  to  buy,  and  at  all  seasons  to 
come  into  the  market  when  they  ought  to  stay  out, 
which  is  about  three  hundred  and  sixty-five  days  in 
the  year. 

Wall  Street  has  no  mills,  mines,  farms,  or  factories. 
It  produces  nothing  of  value  to  any  mortal.  As  for 
supplying  legitimate  demand,  the  Exchange  is  superflu- 
ous, except  as  a  place  for  offering  securities  for  sale  to 
the  highest  bidder.  A  dozen  brokerage  firms,  acting  as 
intermediaries  between  buyers  and  sellers,  could  do  all 
the  legitimate  investment  business  of  the  country  neces- 
sary to  be  done  in  New  York.  The  balance  is  but  a 
vast  scheme  of  speculation,  most  of  it  gambling,  pure 
and  simple,  with  losses  to  the  outside  public  as  inevitable 
as  if  they  risked  their  money  at  the  race  track  upon 
tips  from  insiders  whose  money  they  were  trying  to  win. 

If  one  digs  or  owns  a  canal  of  a  given  width  and 
fifteen  feet  deep,  and  turns  the  natural  flow  of  a  stream 
into  it  which  only  fills  it  five  feet  from  the  bottom, 
there  is  not  much  variation  in  the  depth  of  the  water 
in  the  absence  of  freshets;  and  when  there  are  heavy 
rains,  the  public  are  enabled  to  calculate  their  eff'ect 
upon  the  depth  of  water  with  as  much  certainty  as  the 
owner.  But  suppose  the  owner  owns  a  concealed  reser- 
voir with  an  opening  into  the  ditch,  the  whereabouts  of 
which  is  a  profound  secret  to  all  except  himself,  so  that, 
without  warning,  he  can  instantly  turn  on  a  vast  volume 
of  water  and  cause  an  immediate  rise  in  the  canal  of 
several  feet.  Suppose  he  also  owns  a  secret  drain  which 
he  can  open  instantly,  without  fear  of  detection  or  dis- 
covery, and  reduce  the  depth  at  pleasure.     Now,  if  he 

222 


PANICS   AND    FINANCIAL    DISTURBANCES 

can  induce  the  public  to  engage  with  his  agents — their 
secret  relation  to  him  being  unknown — in  gambling  on 
the  rise  and  fall  of  the  water,  he  will,  with  but  little 
effort  and  in  a  short  time,  be  in  possession  of  all  the 
surplus  cash  of  all  the  outside  gamblers.  The  ditch 
owner  is  the  railroad  company,  the  reservoir  and  secret 
drain,  and  the  unidentified  agent  are  the  directorate, 
the  inside  management,  and  stock-board  manipulator, 
respectively ;  the  gamblers  are  such  of  the  general 
public  as  engage  in  stock  speculation.  To  complete 
the  analogy,  we  might  add  the  false  weather  prognos- 
ticator  and  the  retailer  of  false  reports,  both  in  the 
pay  of  the  ditch  owner,  and  respectively  standing  for 
the  financial  circular  and  the  daily  Wall  Street  organ. 
The  surplus  depth  of  ten  feet,  when  five  feet  is  only 
needed,  may  well  stand  for  overcapitalization.  Again, 
the  natural  and  ordinary  stage  of  water  will  represent 
the  usual  volume  of  traffic,  the  freshets  prosperous 
business,  simulated  or  legitimate,  while  irruptions  from 
the  secret  reservoir  may  stand  for  abnormal  prosperity 
and  big  dividends,  based  on  exorbitant  rates  made  pos- 
sible by  the  possession  of  a  monopoly  in  a  large  and 
populous  territory. 

Hundreds  of  such  schemes  are  in  operation  every 
business  day  in  Wall  Street  alongside  of  other  institu- 
tions, some  auxiliary  to  stock  gambling,  some  legiti- 
mate. Nine-tenths  of  these  vast  schemers  for  fleecing 
the  public  are  the  financial  heads  of  the  railroad  cor- 
porations of  the  country.  Is  it  any  wonder  that  honest, 
conservative  railroad  construction  and  operation  is  a 
thing  of  the  past,  and  that  the  corpus  of  railroad  prop- 
erty is  a  mere  adjunct  to  the  more  profitable  stock- 
jobbing end  of  the  business? 

Having  thus  shown  the  true  character  of  stock 
speculation,  and  how  the  business  is  conducted  by  the 
inside,   and   the   power   it   gives   the   insiders   over  the 

223 


B0SSIS3I    AND    MONOPOLY 

finances  and  speculative  element,  we  may  well  inquire 
as  to  the  relation  which  this  centralized  influence  bears 
to  the  Government,  and  especially  the  lawmaking 
branch.  The  stocks  dealt  in  being  mere  concretes,  often 
of  little  intrinsic  value,  their  market  value  depending 
largely  upon  the  power  of  those  holding  the  controlling 
interest  to  impose  and  collect  charges  for  the  future, 
the  financial  condition  of  the  country,  the  amount  of 
money  available  for  speculative  use,  is  the  most  impor- 
tant factor  in  fixing  prices  on  the  stock  board.  What- 
ever causes  money  to  eagerly  seek  investment  causes 
stocks  to  rise,  whether  they  be  dividend-paying  stocks 
or  those  of  insolvent  companies ;  whatever  withdraws 
money  from  active  circulation,  whether  it  be  carried  out 
of  the  country  or  hoarded  by  banks  or  persons,  depresses 
prices.  Money  is  a  creation  of  law,  and  every  change 
or  threatened  change,  every  element  of  uncertainty  con- 
cerning the  financial  policy  of  the  Government,  unsettles 
prices.  Not  only  so,  but  panics  may  result  from  fear, 
as  was  the  case  in  1893. 

The  stock  market  is  likewise,  but  in  a  less  degree, 
aff'ected  by  proposed  laws  affecting  the  public  revenues, 
and  threatened  legislation  affecting  corporations.  It 
is  therefore  worth  a  fortune  for  any  man  to  know  how 
or  to  what  effect  Congress  will  act  upon  such  measures 
pending  before  it,  provided  he  knows  at  the  same  time 
the  inside  secrets  of  any  corporation  whose  stock  is 
active  on  the  board.  So  there  is  the  strongest  of  human 
incentives  for  the  corporate  and  the  congressional  insider 
to  exchange  knowledge  of  facts,  and  to  act  in  concert. 

And  let  us  suppose  they  have  "  pooled  their  inter- 
ests." Would  it  not  be  too  much  to  expect  of  the  sena- 
torial member  of  the  combination  to  ruin  himself  by 
voting  against  his  financial  interest?  Few  congressmen 
or  senators  would  humiliate  themselves  by  deliberately 
accepting  a  bribe  in  gold  coin.     But  the  subornation 

2M 


PANICS   AND    FINANCIAL    DISTURBANCES 

and  corruption  comes  to  them  in  the  guise  of  an  "  oppor- 
tunity." Polonius's  exhortation  to  his  son,  "  Put  money 
in  thy  purse,"  has  come  thundering  down  the  ages  with 
a  curse  upon  it.  It  has  become  a  rule  of  action  in  many 
circles  of  society,  and  in  obedience  to  its  command  men 
have  stifled  patriotism,  honor,  virtue,  and  even  religion. 
Laws  which  have  enabled  individuals  in  the  short  span 
of  a  lifetime  to  seize  hundreds  of  millions  have  done 
more  to  debase  true  manhood  and  womanhood,  to  pol- 
lute the  hearts  of  the  people  and  endanger  the  life  of 
the  Republic,  than  all  the  carnal  vices  and  passions. 
Much  of  the  congressional  legislation  for  three  decades 
has  been  a  series  of  public  bounties  to  individuals  and 
aggregations  of  individuals. 

Senators  and  representatives  are  the  sole  judges  of 
the  kind  of  business  in  which  they  shall  engage;  nor 
can  it  be  said  to  necessarily  involve  moral  obliquity  for 
a  senator  or  representative  to  engage  in  stock  specula- 
tion during  sessions  of  Congress.  It  certainly  is  not  a 
violation  of  any  statute  law.  The  right  was  openly 
claimed  and  exercised  by  Senator  Matthew  Quay,  of 
Pennsylvania.  It  has  been  exercised,  but  not  claimed, 
by  many  others.  During  the  distressing  paralysis  of 
every  description  of  business  in  1893,  during  public 
agony,  commercial  and  industrial  as  well  as  financial, 
the  senators,  instead  of  taking  action,  were  deadlocked, 
but  not  tongue-tied.  During  all  this  time  certain  sena- 
tors— as  well  those  opposed  as  those  favoring  the  Sil- 
ver Repeal  bill — when  not  killing  time  in  the  Senate, 
were  in  Wall  Street,  consoling  themselves  for  their 
country's  loss  by  their  own  individual  gains;  swapping 
the  knowledge  gained  officially  for  such  tips  and  points 
as  the  managers  of  powerful  corporations  and  their 
brokers  could  give.  The  "  senatorial  party  "  and  its 
attitude  in  the  stock  market  was  then,  and  for  many 
years    has    constantly    been,    a    fixed    institution.      The 

225 


BOSSISM    AND    MONOPOLY 

course  of  many  operators  and  the  destiny  of  much 
capital  are  determined  by  the  side  of  the  market  taken 
by  this  "  senatorial  party."  In  the  spring  of  1894  an 
investigation  was  made  by  a  Senate  committee  upon 
accusations  made  in  a  New  York  paper  to  the  effect 
that  the  dilly-dallying  of  the  Senate  over  the  Wilson 
Tariff  bill  had  a  direct  and  essential  relation  to  the 
market  for  certificates  of  the  Sugar  Trust  on  the  New 
York  Stock  Board,  The  bill,  as  it  came  from  the  House, 
affected  the  earnings  of  that  enterprising  monopoly 
detrimentally,  and  the  amendments  adopted  in  the  Sen- 
ate made  a  difference  in  its  favor  of  $60,000,000  annu- 
ally. The  evidence  satisfied  the  country,  if  it  did  not 
the  Senate,  that  a  profitable  arrangement  had  been 
entered  into,  and  preserved  during  the  entire  session, 
between  a  controlling  coterie  of  members  and  the  man- 
agers of  the  Sugar  Trust.  Strange  and  sorrowful  to 
relate,  there  was  no  outburst  of  indignation  from  the 
people.  The  protests  and  excoriations  were  mild  in 
comparison  with  those  which  resounded  from  one  end  of 
the  land  to  the  other  when  the  Credit  Mobilier  scandal 
was  exposed.  Nor  did  the  exposure  of  the  Sugar  Trust 
scandal  result  in  the  defeat  of  the  Senate  amendments; 
nor  was  Senator  Quay,  who  confessed  his  undoing,  ex- 
pelled or  even  censured. 

An  important  consequence  of  government  ownership 
would  be  the  displacement  of  tliis  enormous  volume  of 
inflated  stock  and  the  substitution  of  bonds  of  the  Gov- 
ernment bearing  a  low  rate  of  interest.  Investors  would 
take  the  place  of  speculators ;  fraudulent  railroad  man- 
agement for  dishonest  speculative  purposes  would  give 
way  to  conservative  economical  administration;  govern- 
ment employees,  selected  for  their  qualifications,  would 
supersede  others,  selected,  not  for  their  knowledge  of 
the  railroad  business  but  for  their  skill  in  rigging  the 
market    and    carrying   through    stockjobbing    schemes. 

226 


n 


PANICS   AND    FINANCIAL    DISTURBANCES 

Better  than  all,  the  greatest  obstacle  to  speedy  legisla- 
tion of  the  proper  kind  by  Congress,  and  greatest  men- 
ace to  the  Republic,  would  be  removed. 

Just  before  his  death.  Senator  M.  A.  Hanna,  who 
had  jumped  the  game  of  high  finance  and  gotten  into 
the  game  of  politics,  in  an  address  before  the  Union 
League  Club,  at  Cleveland,  Ohio,  said :  "  Everything 
that  Wall  Street  could  do  to  foment  trouble  it  has  been 
guilty  of  doing.  Millions  upon  millions  of  securities 
have  been  issued,  and  the  great  middle  class  has  been 
pumped  dry.  The  buying  power  of  the  workers  has 
been  reduced  greatly,  and  we  have  offered  every  induce- 
ment to  the  laboring  man,  by  our  attitude,  to  revolt." 

It  is  by  these  methods,  by  these  instrumentalities  and 
brokers,  that  the  railroad  securities  of  the  country  are 
marketed.  And  a  vast  majority  of  those  who  own  them 
are  represented  by  learned  opponents  of  government 
ownership  as  interests  that  are  to  be  considered  sacred. 
It  is  through  this  huge  device — in  this  mart,  if  you 
please — that  railroad  kings  and  other  insiders  market 
their  inflated  issues  of  corporate  stocks  and  bonds,  and 
then  point  to  the  conditions,  created  by  their  own  infla- 
tions and  manipulations  with  the  public,  as  a  warning 
against  any  legislation  calculated  to  disturb  "  the 
finances  "  of  the  nation. 

A  seat  in  the  regular  Exchange  now  sells  for  $80,- 
000,  and  a  seat  only  ostensibly  includes  the  privilege  of 
meeting  there  the  other  regular  brokers,  and  buying 
and  selling  securities  on  commission.  There  are  out- 
standing eleven  hundred  "  seats,"  but  really  there  are 
no  seats  on  the  floor  of  the  Exchange.  Here  is  an  in- 
vestment of  $88,000,000.  Office  rents  and  clerical  help, 
advertising,  etc.,  must  cost  at  least  $100,000,000  more. 
Annual  interest  on  the  cost  of  seats,  at  four  per  cent, 
amounts  to  over  $3,500,000.  These  vast  sums  must  be 
paid  out  of  brokers'  commissions  before  there  is  a  cent 

227 


BOSSISM    AND    MONOPOLY 

of  profit  for  the  outsiders.  This  showing  assumes  that 
dealings  are  conducted  squarely,  as  would  be  the  case 
if  the  outsider  risked  his  money  at  Monte  Carlo.  But 
they  arc  not.  A  few  insiders,  working  the  market  up 
and  down,  reap  large  crops  of  eagles  and  greenbacks 
each  year  where  they  have  sown  nothing  but  snares. 
They  prepare  the  daily  programmes,  mark  and  stack 
the  cards.  The  brokers  manage  the  game.  Outside 
"  investors  "  do  the  rest.  Occasionally  an  outsider,  more 
courageous  than  the  rest,  stands  against  the  current  of 
rumor  and  falsehood,  and  comes  out  a  winner ;  but  unless 
he  pulls  out  and  quits  as  soon  as  he  finds  himself  "  to 
the  good,"  his  case  will  be  made  a  specialty,  and  the 
whole  power  of  the  inside  will  be  used  to  swamp  him 
the  moment  he  dares  to  make  a  large  investment  upon 
margin  account. 

This  device  of  doing  business  on  margin  is  very 
clever  and  seductive.  It  enables  one  to  do  what  appears 
to  be  a  large  business  with  but  little  cash.  But,  like 
many  other  seductive  things,  it  is  fateful.  Of  course 
there  are  a  few  who  come  to  Wall  Street  to  invest 
their  earnings  or  profits  in  gilt-edge  bonds  or  stocks. 
For  these  they  will  pa}"^  such  full  value  that  they  are 
fortunate  if  they  realize  four  per  cent  per  annum  on 
the  investment.  But  ninety-nine  out  of  a  hundred  come 
there  to  exchange  their  good  currency  or  gold  for  stock 
certificates,  for  which  they  have  no  use  whatever,  in 
the  hope  that  the  price  will  advance,  or  to  sell  shares, 
which  they  do  not  own  and  do  not  want,  with  the  hope 
that  they  may  soon  buy  them  and  square  the  account, 
with  the  cash  balance  on  the  right  side. 

There  are  two  great  classes  of  stocks — railroads  and 
industrials.  In  dishonest  manipulation  and  as  a  means 
for  flim-flamming  and  circumlocuting  the  "  street "  out 
of  their  dollars,  promoters  and  inside  dealers,  in  the 
respective  classes,  have  just  about  equally  divided  the 

228 


PANICS   AND    FINANCIAL    DISTURBANCES 

dishonors  and  gains.  But  it  is  elsewhere  shown  that 
railroad  management  is  largely  responsible  for  the  in- 
dustrial trusts  which  issued  the  industrial  stocks. 

When  the  people  get  rid  of  the  present  corrupt 
railroad  management  by  taking  the  railroads,  they  will 
also  get  rid  of  the  germs  of  the  Wall  Street  plague,  in 
both  its  industrial  and  railway  phases.  So  much  space 
could  not  be  here  properly  devoted  to  the  stock  specu- 
lative game  in  Wall  Street  had  it  not  a  larger  signifi- 
cance. The  outside  devotees  of  the  game  there  played 
are  few  in  number  in  comparison  with  our  entire  popu- 
lation, and  in  point  of  property  Interests  the  propor- 
tions are  about  the  same.  Those  who  go  there  and 
"  buck "  against  the  game  are  entitled  to  but  little 
sympathy  or  consideration  in  so  far  as  they  are  per- 
sonally concerned.  But  the  conditions  created  by  the 
presence  and  operations  of  the  institution  are  matters 
of  general  concern.  When  a  circus  and  menagerie  visits 
an  unfrequented  rural  district  it  Is  apt  to  leave  In  its 
wake  a  scarcity  of  change,  which  will  be  felt  for  some 
time  afterwards.  In  this  way  Its  coming  and  going  Is 
a  matter  of  deep  concern  to  every  business  man  in  that 
nelghboi-hood,  though  some  of  them  may  never  dream 
of  going  under  the  sheltering  folds  of  the  magnificent 
tent.  In  Wall  Street  we  have  a  circus  running  all  the 
year  round,  every  day  except  Sundays  and  holidays. 
It  affects  the  circulating  medium  of  the  country  in 
every  way  except  healthfully. 


229 


CHAPTER    XI 

EVILS  OF,  AND  ABUSES  BY,  RAILROADS  IN  PRIVATE  HANDS 

DISCRIMINATIONS       BY       WHICH       INDIVIDUALS       ARE 

RUINED    AND    INDUSTRIAL    MONOPOLIES    CREATED    AND 
MAINTAINED 

There  has  not  been  an  official  investigation  of  rail- 
road evils  and  abuses  in  nearly  twenty  years.  If,  dur- 
ing that  period,  those  whose  duty  it  was  to  investigate 
and  act  had  the  time,  they  appear  to  have  lacked  the 
will;  but  no  proof  is  needed  that  conditions  have  grown 
worse,  instead  of  improving,  since  1886.  The  Interstate 
Commerce  Commissioners  give,  from  time  to  time,  con- 
clusive evidence  to  that  effect. 

We  cannot  make  a  better  beginning  than  by  insert- 
ing the  presentation  of  the  evils  and  abuses  of  railroads, 
under  their  present  ownership  and  management,  con- 
tained in  the  report  of  the  Senate  Committee  on  Inter- 
state Commerce,  submitted  by  Senator  Cullom  in  1886: 

"  1.  That  local  rates  are  unreasonably  high,  as 
compared  with  through  rates. 

"  2.  That  local  and  through  rates  are  unreasonably 
high  at  non-competing  points,  either  from  the  absence 
of  competition  or  in  consequence  of  pooling  agreements 
that  restrict  its  operation. 

"  3.  That  rates  are  established  without  apparent 
regard  to  the  actual  cost  of  the  service  performed,  and 
are  based  largely  on  *  what  the  traffic  will  bear.' 

"  4.  That  unjustifiable  discriminations  are  con- 
stantly made  between  individuals  in  the  rates  charged 
for  like  service  under  similar  circumstances. 

230 


DISCRIMINA  TIONS 

"  5.  That  improper  discriminations  are  constantly 
made  between  articles  of  freight  and  branches  of  busi- 
ness of  a  like  character,  and  between  different  quantities 
of  the  same  class  of  freight. 

"  6.  That  unreasonable  discriminations  are  made 
between  localities  similarly  situated. 

"  7.  That  the  effect  of  the  prevailing  policy  of 
railroad  management  is,  by  an  elaborate  system  of 
secret  special  rates,  rebates,  drawbacks,  and  concessions, 
to  foster  monopoly,  to  enrich  favored  shippers,  and  to 
prevent  free  competition  in  many  lines  of  trade  in  which 
the  item  of  transportation  is  an  important  factor. 

"  8.  That  such  favoritism  and  secrecy  introduce  an 
element  of  uncertainty  into  legitimate  business  that 
greatly  retards  the  development  of  our  industries  and 
commerce. 

"  9.  That  the  secret  cutting  of  rates  and  the  sud- 
den fluctuations  that  constantly  take  place  are  demoral- 
izing to  all  business  except  that  of  purely  speculative 
character,  and  frequently  occasion  great  injustice  and 
heavy  losses." 

There  were  altogether  eighteen  numbered  para- 
graphs of  the  long  indictment,  but  only  the  first  nine 
related  to  discriminations.  Since  railroad  charges,  as 
has  been  frequently  shown,  are  taxation,  they  should 
be  governed  by  the  fundamental  principle  of  taxation ; 
that  is,  they  should  bear  equally  upon  all  in  proportion 
to  the  service.  Tliis  rule  underlies  the  taxing  power  of 
the  general  and  all  State  governments.  It  needs  no 
argument  to  show  that  unequal  taxation,  or  taxation 
out  of  proportion  to  the  benefits  received  from  govern- 
mental protection,  is  unjust  taxation.  This  principle 
has  found  recognition  and  expression  in  all  modern 
constitutions.  Arbitrary  inequalities  of  burdens  exacted 
from  the  colonists  by  Great  Britain,  to  whom  represen- 
tation was  denied,  was  the  chief  grievance  which  led  to 
16  231 


BOSSISM   AND    MONOPOLY 

the  Revolution.  Now  railroad  companies  have  had  con- 
ferred upon  them  valuable  franchises  of  a  public  nature, 
namely,  the  power  to  collect  fares  and  freights ;  that 
is,  the  power  to  tax.  These  franchises  are  attributes 
of  sovereignty,  and  their  exercise  is  the  exercise  of 
governmental  authority  over  every  individual  affected. 
Therefore,  the  persons  who  must  patronize  railroads — 
practically  all  the  people — have  the  right  to  insist  that 
there  shall  not  only  be  none  other  than  reasonable 
charges  for  transportation,  but  that  there  shall  be  no 
discriminations.  The  violations  of  this  just  rule  have 
not  been  few,  accidental,  or  temporary.  The  practice  has 
been  general,  persistent,  and  unlimited.  Whenever  a  rail- 
road, by  reason  of  its  location,  had  a  monopoly  within 
a  given  territory,  the  capacity  of  persons  to  pay  the 
fares  and  travel,  and  of  the  products  to  pay  the  freights 
and  bear  the  transportation  without  loss  to  the  producers 
or  dealers,  has  been  made  the  basis  for  fixing  rates ;  and 
when  there  was  competition,  in  the  absence  of  a  pool- 
ing arrangement,  transportation  has  frequently  been 
furnished  at  less  than  cost  of  service.  In  all  such  cases, 
the  dividends  on  the  stock  and  interest  on  the  bonds 
have  been  exacted  from  one  class,  wliile  the  use  of  the 
capital  has  been  loaned  to  another  class  without  interest 
or  charge ;  and,  in  the  case  of  transportation  at  less 
than  cost,  the  services  of  the  employees  have  been  par- 
tially added,  and  collected  from  the  patrons  of  the  roads 
discriminated  against.  It  should  be  remarked  that  the 
evils  of  discrimination  have  been  to  some  extent  allevi- 
ated by  the  Interstate  Commerce  act;  but  no  one  ob- 
servant and  competent  to  judge  of  the  drift  and  result 
of  litigation  involving  the  provisions  of  the  law  will 
fail  to  see  that,  where  its  prohibitions  have  not  been 
openly  defied,  shrewd  and  unscrupulous  men,  assisted  by 
able  and  influential  counsel  and  unlimited  wealth,  have 
found  it  an  easy  task  to  obey  its  letter  and  violate  its 

232 


DISCRIMINA  TIONS 

spirit.  But  the  favorite  and  usual  course  has  been  to 
flagrantly  violate  it,  and  then  to  escape  punishment  by 
concealing  the  proofs  of  guilt.  Time  and  again  has 
the  humiliating  spectacle  been  presented  of  railroad 
officials  confessing  guilt  by  refusing  to  testify,  on  the 
ground  that  by  doing  so  they  would  criminate  themselves. 

Throughout  the  entire  business  community,  from 
ocean  to  ocean,  and  from  the  Canadian  border  to  the 
Gulf,  is  found  the  dread  of  railroad  discrimination,  and 
fear  of  ruin  as  a  result.  Cowardice  and  timidity  have 
silenced  the  tongues  of  business  men  of  every  degree 
and  in  every  line  of  trade,  while  self-interest  and  guilt 
have  closed  the  mouths  of  those  responsible  for  discrimi- 
nation and  rebates.  The  situation  is  one  of  terror  and 
foreboding  not  only  in  the  great  body  of  business  men 
proper,  but  among  trades  and  professions  more  or  less 
dependent  upon  business  transactions,  such  as  lawyers, 
editors,  and  teachers. 

The  origin  of  discriminations  against  localities  was 
an  attempt  of  railroads  having  common  points  with 
other  roads  to  overreach  them  and  deprive  them  of  a 
just  share  of  the  business  at  reduced  rates.  Various 
excuses  were  given  for  this,  the  most  plausible  being 
that  the  fixed  charges  being  the  same,  whether  their 
cars  were  loaded  or  empty,  they  could  better  afford  to 
do  the  business  at  a  small  profit,  or  even  no  profit  at  all, 
than  to  lose  it  entirely.  The  unsoundness  of  this  plea 
is  seen  at  once  when  it  is  considered  that  these  fixed 
charges — interest,  dividends,  wages,  and  repairs — must 
be  paid  at  all  events ;  and  if  not  paid  from  profit  on 
through  business,  they  must  be  paid  by  increased  charges 
on  business  from  local  or  intermediate  points.  This 
attenuated  plea  has  often  been  invoked  as  an  excuse  for 
the  doing  of  competitive  business  at  a  loss.  Suppose 
the  same  practice  were  attempted  by  a  man  engaged  in 
another   line   of  business   where   competition   is    always 

233 


BOSS  ISM    AND    MONOPOLY 

present;  where  there  is  no  class  or  locahty  upon  which 
the  dealer  or  mill  owner  could  lay  tribute  to  the  extent 
of  the  uttermost  farthing  the  consumer  is  able  to  pay; 
where  extortion  cannot  be  practiced,  just  short  of  the 
prohibitory  point,  as  in  the  case  of  railroad  corporations 
— what  would  be  the  result?  Let  us  suppose,  for  in- 
stance, that  a  merchant  in  any  city  or  town,  having  a 
fixed  expense  for  rent,  clerk  hire,  interest,  and  family 
support,  should  begin  to  sell  below  cost  to  certain  indi- 
viduals, with  a  view  to  drawing  their  trade  away  from 
his  rivals;  would  not  all  his  other  patrons  understand 
at  once  that  they  must  pay  enough  in  increased  profits 
to  make  up  the  deficiency?  Either  that,  or  he  must  soon 
become  bankrupt  and  go  out  of  business.  It  is  useless 
to  further  elaborate  the  truth  of  the  proposition  that 
these  discriminations  are  unjust  and,  since  the  enact- 
ment of  the  Interstate  Commerce  law,  criminal ;  yet  they 
are  well-nigh  universal,  despite  the  penal  clauses  of  that 
act.  No  better  evidence  of  this  need  be  adduced  than 
the  utter  inability  of  the  commission  to  procure  evidence 
as  to  comparative  local  and  through  rates  in  many 
instances. 

Equally  despotic  and  unreasonable  are  the  discrimi- 
nations between  kinds  of  goods  and  classes  of  business. 
In  this,  as  in  revenue  law,  were  the  rates,  once  fixed, 
allowed  to  remain,  however  unjustly  and  arbitrarily, 
business  and  prices  would  in  time  adjust  themselves  to 
correspond  with  the  cost  of  transportation,  and  the  loss 
to  the  consumers  from  payment  of  exorbitant  freights 
would  be  the  only  serious  injury.  But  freight  charges 
enter  so  largely  into  the  cost  of  consumption  that 
changes  and  fluctuations  in  rates  cause  prices  to  fluctu- 
ate, so  that  any  merchant  who  orders  a  large  stock  of 
a  given  article  to-day  may  be  a  heavy  loser  to-morrow 
by  a  material  reduction  which  redounds  greatly  to  the 
profit  of  his  rival  in  business. 

234 


D I  SCRIM  IN  A  TIONS 

Lords  of  transportation  are  by  nature  and  habit 
despotic.  To  their  minds,  the  manner  in  which  they 
adopt  rates  is  no  concern  of  those  who  pay  them.  They 
tolerate  no  interference  on  the  part  of  those  who,  equally 
with  themselves,  are  most  concerned,  and  deny  the  right 
of  even  the  Government  to  interfere  with  what  pro  hdc 
vice  they  term  their  private  business.  The  whole  his- 
tory of  the  rule  of  traffic  managers  and  traffic  associa- 
tions is  a  catalogue  of  incongruities,  inequalities,  un- 
just exactions,  and  cowardly  advantages  taken  of  those 
dependent  upon  them  for  transportation.  The  follow- 
ing examples,  taken  from  the  records  of  the  Interstate 
Commerce  Commission,  serve  to  illustrate  innumerable 
instances  which  might  be  cited;  and  as  most  of  them 
have  been  brought  to  notice  since  the  enactment  of  that 
law,  its  weakness  and  inadequacies  as  a  remedy  for  rail- 
road abuses  are  clearly  demonstrated.  A  price  which 
is  practically  prohibitory  is  charged  by  Eastern  as  well 
as  Western  roads  on  railroad  ties.  There  are  two  mo- 
tives for  this.  First,  high  rates  of  transportation  enable 
the  nearest  line  to  obtain  them  for  its  own  repairs  at  a 
price  fixed  by  itself ;  secondly,  prohibitory  rates  prevent 
or  delay  the  construction  of  new  lines,  which,  when  com- 
pleted, may  become  competitors.  The  Union  Pacific  has 
for  years  adhered  to  the  evil  policy  of  making  pro- 
hibitory rates  on  steel  rails  intended  for  the  construction 
of  rival  lines  to  the  Pacific  coast.  The  rates  of  the 
Southern  Pacific  on  fruits  have  never  been  fixed  and 
certain  through  a  single  fruit  season,  but  have  risen 
and  fallen  with  the  price  of  the  commodity  in  the  East- 
ern markets,  being,  however,  always  high,  ranging  be- 
tween .$250  and  $600  per  carload.  The  rule  of  "  all 
that  the  traffic  will  bear "  has  always  prevailed  with 
this  company,  and  is  of  general  application.  If  any 
public  duty  were  acknowledged  by  that  great  corpora- 
tion, which  more  than  any  other  has  enjoyed  the  na- 

235 


BOSSISM    AND    MONOPOLY 

tional  bounty,  a  rate  would  be  fixed  on  grain  and  other 
coarse  products  of  California,  Nevada,  and  Arizona 
which  would  justify  their  being  marketed  on  the  Atlan- 
tic coast;  but  on  all  the  heavier  and  cheaper  products 
of  the  Pacific  States  its  rates  are  prohibitory,  so  that 
water  transportation  and  foreign  markets  are  the  only 
resource.  But  fresh  fruits  and  fresh  meats  and  live 
stock  will  not  bear  the  delay  incident  to  water  trans- 
portation, so  that  the  lion's  share — often  the  entire 
profit — on  the  most  profitable  industries  is  appropriated 
by  the  half  dozen  millionaires  who  own  the  stocks  and 
bonds  of  the  Southern  Pacific. 

Individual  instances  of  discrimination  cannot  be  no- 
ticed. Committees  of  Congress  and  of  State  legisla- 
tures have  from  time  to  time  investigated  and  reported, 
and  reports  by  the  Interstate  Commerce  Commission  are 
filled  with  instances.  All  these  and  many  others  have 
been  published,  and  are  still  being  published,  in  the 
daily  press.  By  taking  note  of  these  and  many  other 
instances  with  which  shippers  are  familiar,  the  rapid 
strides  of  the  railroad  companies  toward  a  total  sub- 
jversion  of  the  constitutional  right  to  equal  opportuni- 
ties, and  usurpation  of  prerogatives  denied  even  to  the 
Government  itself,  are  made  manifest.  Neither  the  In- 
terstate Commerce  act  nor  any  State  statute  has  done 
more  than  give  expression  to  common-law  principles ; 
and  the  futihty  of  trying  to  enforce  justice  on  the 
part  of  railroad  corporations  by  the  mere  reassertion  of 
those  principles  which  have  been  trampled  under  foot 
and  ignored  for  many  years,  needs  no  demonstration. 

The  congressional  enactment  not  only  fails  to  do 
more  than  give  expression  to  the  common  law,  but  it 
gives  statutory  recognition  to  a  long-standing  violation 
of  the  rights  of  the  people  under  tlie  common  law.  This 
reference  is  the  exception  made  to  the  long-  and  short- 
haul  provision  of  the  act  where  there  is  water  compe- 

236 


BI  SCRIM  IN  A  TIONS 

tition.  If  it  is  right  that  the  people  should  enjoy  the 
benefits  of  competition  between  railroads,  it  is  also  just 
and  proper  that  they  should  have  the  full  benefits  of 
transportation  by  water.  The  provision  of  the  Inter- 
state Commerce  act  which  allows  railroads  to  charge  a 
less  rate  to  and  from  points  where  there  is  competition  by 
water,  than  for  the  same  distance  where  there  is  no  such 
competition,  takes  the  pith  and  marrow  from  the  whole 
act,  and  leaves  it  a  sham  and  hollow  mockery.  For  what 
purpose  were  our  great  oceans,  lakes,  and  rivers  given  us  ? 
Were  they  bestowed  by  a  bountiful  Providence  that 
their  usefulness  should  be  destroyed  by  an  Act  of  Con- 
gress? Why  should  the  energies  and  talents  of  many 
persons  be  excluded  from  the  business  of  transporting 
their  products  by  water,  and  enterprise  in  their  field 
of  industry  hampered  in  the  interest  of  other  private 
citizens?  The  power  to  build  up  by  legislation  one 
private  industry  at  the  expense  of  another  has  been 
denied  by  our  highest  courts  in  special  instances.  Why 
should  not  the  principle  be  given  a  general  application? 
If,  in  the  absence  of  this  provision,  and  with  the  long- 
and  short-haul  clause  made  general,  railroads  cannot  do 
the  present  volume  of  business  at  lake  and  river  points, 
let  them  do  less  business.  Let  them  devote  their  ener- 
gies to  the  development  of  localities  now  neglected  by 
them  and  discriminated  against.  Let  each  of  the  two 
means  of  transportation  occupy  the  sphere  which  can 
be  the  most  useful  to  the  whole  body  of  the  people. 
And  if  it  comes  al>out  that  revenues  are  unsatisfactory, 
the  result  lies  at  the  door  of  overcapitalization.  Only 
a  little  reflection  is  necessary  to  discover  the  justness  of 
this  contention.  Carriage  of  heavy  freights,  such  as 
grain,  coal,  and  lumber,  from  lake  ports  to  New  York 
are  at  least  one  hundred  per  cent  less  costly  by  water 
than  by  rail,  and  the  necessary  delay  is,  as  a  rule,  a 
matter  of  no  consequence.     The  rail  rates  on  these  have 

237 


BOSSISM    AND    MONOPOLY 

often  been  so  low  as  to  result  in  positive  loss  to  the 
railroad  companies.  Of  course  these  losses  were  made 
up  on  other  articles.  These  heavy  freights,  carried  by 
water  in  large  quantities  at  the  rates  which  were  losing 
rates  to  the  railroads,  would  have  yielded  a  reasonable 
profit.  The  results  of  this  discrimination,  long  con- 
tinued, are  the  destruction  of  capital  invested  in  lake 
and  canal  traffic,  the  withholding  from  this  industry  of 
new  capital  which  would  give  profitable  employment  to 
many  men,  and  misdirected  energy  of  all  the  extra  em- 
ployees made  necessary  by  the  unnatural  diversion  of 
these  heavy  freights  to  the  railroads.  And,  finally,  as 
has  been  seen  time  and  time  again,  when  ocean,  lake, 
canal,  and  river  tonnage  has  been  reduced  so  that  a 
large  proportion  of  the  product  must  go  by  rail,  if  it 
go  at  all,  rates  have  been  increased  and  maintained 
through  the  power  of  the  railroad  pool.  Such  have  been 
the  experiences  of  San  Francisco  in  her  efforts  to  escape 
the  clutches  of  the  Southern  Pacific  monopoly  by  estab- 
lishing an  ocean  line  to  New  York  in  opposition  to  the 
railroad  and  Pacific  Mail  Steamship  Company,  owned 
by  the  railroad  company.  All  efforts  in  this  direction 
by  the  people  of  the  Pacific  metropolis  have  been  stran- 
gled by  the  giant  monopoly  in  their  infancy,  and  men 
can  no  longer  be  found  willing  to  so  invest  their  capital 
that  it  may  be  wiped  out  by  the  stroke  of  the  pen  of 
the  general  freight  agent  of  the  Southern  Pacific 
Company. 

The  Federal  Government  has,  during  the  last  seven 
years,  appropriated,  out  of  funds  derived  from  taxa- 
tion, $175,000,000  for  a  system  of  river  and  harbor 
improvements.  These  appropriations  were  made  for  the 
principal  purpose  of  increasing  transportation  facilities ; 
but  the  people  have  been  robbed  of  this  advantage,  to  a 
great  extent,  by  this  unwise  exception  from  the  general 
equalizing  clause  in  the  Interstate  Commerce  act. 

238 


DISCRIMINA  TIONS 

But  the  most  demoralizing  discriminations,  submis- 
sion to  which  implies  the  degradation  of  republican 
manhood,  and  the  toleration  of  which  by  the  general 
and  State  governments  signifies  the  utter  prostitution 
of  power  and  surrender  of  the  rights  of  sovereignty 
to  despotic  and  conscienceless  corporations,  are  those 
against  individuals,  and  against  others  similarly  situ- 
ated, for  the  same  service.  What  would  be  said  of  a 
law  which  provided  that,  in  return  for  the  benefits  of 
the  public  schools  in  a  particular  State,  each  citizen  by 
the  name  of  Jones  should  pay  fifty  cents  on  the  hun- 
dred dollars  of  property,  but  that  each  citizen  by  the 
name  of  Brown  should  be  taxed  $1  on  the  hundred. 
Any  attempt  to  enforce  such  an  unjust  law  would  meet 
with  violent  resistance.  But  the  railroad  companies, 
possessing  as  they  do  powers,  though  not  the  rights, 
more  absolute  than  the  State  itself,  namely,  the  power 
to  impose  unequal  taxation,  the  payment  of  which  can- 
not be  evaded  or  postponed,  make  such  discriminations 
daily  and  habitually ;  and,  though  in  violation  of  the 
penal  provisions  of  the  Interstate  Commerce  act,  pun- 
ishment is  evaded  by  the  coward's  and  the  felon's  plea. 
Governor  Larabee,  in  "  The  Railroad  Question,"  for- 
cibly expresses  the  demoralization  effected  by  individual 
discriminations.  On  page  137  he  says :  "  Where  such 
discrimination  obtains,  every  shipper  is  in  the  power 
of  the  railroad  corporation.  It  makes  of  independent 
citizens  of  a  free  country  fawning  parasites  and  ob- 
sequious sycophants,  who  accept  favors  from  railroad 
managers,  and  in  return  do  their  bidding,  however  hu- 
miliating this  may  be.  The  shipper,  realizing  that 
managers'  displeasure  or  good  will  toward  him  finds 
practical  expression  in  his  daily  freight  bills,  finally 
loses,  like  the  serf,  all  self-esteem  in  his  efforts  to  pro- 
pitiate an  overbearing  master.  He  is  intimidated  to 
such  an  extent  that  he  never  speaks  openly  of  existing 

239 


BOSSISM    AND    MONOPOLY 

abuses  lest  he  lose  the  special  rates  which  have  been 
given  him;  or,  if  he  is  not  a  participant  of  such  privi- 
leges, lest  additional  favors  be  given  to  his  rivals,  and 
they  be  thus  enabled  to  crush  him." 

Through  individual  discriminations  the  companies 
blight  their  enemies  and  reward  their  friends.  This 
odious  practice  causes  the  ruin  of  honest,  industrious 
citizens  of  independent  dispositions  from  causes  which 
are  not  publicly  known;  the  wrong  cause,  such  as  dis- 
honesty, lack  of  knowledge  and  enterprise,  often  being 
assigned.  On  the  other  hand,  the  pliant,  cringing  tools 
and  implements  of  the  railroad  company,  well  fitted  for 
obscurity,  are  raised  to  financial  or  political  eminence. 
Instances  may  be  found  in  nearly  every  considerable 
town  and  city  in  the  West  and  in  many  Eastern  towns. 
Some  striking  instances  of  this  abuse  of  power  were 
recorded  by  the  Hepburn  Committee,  which  found  that 
intimidation  of  shippers  was  so  widespread  that  they 
almost  invariably  refused  to  attend  and  testify  until 
subpoenaed,  lest  they  incur  the  hostility  of  the  railroad 
companies  and  be  ruined.  The  committee  report  showed 
that  the  special  rates  granted  to  favored  shippers  con- 
formed to  no  system  and  varied  without  rule;  that 
every  application  for  a  special  rate  was  judged  by 
itself  and  with  reference  to  its  own  peculiar  circum- 
stances; and  that  it  depended  upon  the  judgment,  or 
rather  caprice,  of  the  officer  to  whom  the  application 
was  made,  whether  and  to  what  extent  a  special  rate 
should  be  granted.  The  reductions  made  to  privileged 
merchants  often  amounted  to  more  than  what  would  be 
a  fair  profit  to  the  dealer  on  the  commodities  shipped. 
The  privileged  dealer  was  thus  enabled  to  undersell  his 
rivals,  and  eventually  force  them  out  of  business  or  into 
bankruptcy.  It  was  not  at  all  uncommon  for  railroad 
companies  to  allow  discounts  amounting  to  fifty,  sixty, 
seventy,  and  even  eighty  per  cent  of  the  regular  rates. 

240 


D I  SCRIM  IN  A  TIONS 

Another  branch  of  discrimination  wliich  may  be 
more  properly  noticed  under  this  head  than  any  other, 
respects  the  location  of  new  roads,  by  which  we  mean 
choice  of  routes  and  depot  sites  with  a  view  to  the  profits 
of  the  promoters  and  their  friends.  In  Mr.  Lewis's 
work,  entitled  "  National  Consolidation  of  Railways  " 
(page  83),  he  says:  "In  the  newer  sections  of  the 
country,  when  a  new  railroad  line  is  projected,  usually 
a  town-lot  and  land  company  is  organized,  in  which 
prominent  officials  of  the  railroad  are  principally  inter- 
ested, and  their  knowledge  of  the  proposed  location  of 
the  road  is  utilized  in  purchasing  tracts  of  land,  at 
nominal  values,  for  town  sites,  to  be  sold,  after  the  town 
is  located,  at  an  enormous  advance.  Frequently  the  line 
of  the  road  is  swerved  from  the  best  route  to  some  in- 
ferior location  to  advance  these  private  schemes.  Some- 
times the  entire  route  becomes  a  land-grabbing  scheme 
with  a  town-lot  speculation  attachment.  The  western 
half  of  one  of  the  principal  roads  in  Iowa  was  built 
mainly  on  this  plan.  Its  natural  route  was  along  one 
of  the  old  stage  routes  running  through  the  county 
seats  of  the  counties  through  which  it  must  pass.  About 
these  towns  was  a  well-settled  country,  with  rich  farms 
well  improved  for  that  early  day.  The  towns  were 
moderate  in  size,  but  had  been  established  as  trading 
points  for  many  years,  and  stores,  schools,  and  churches 
had  grown  up.  But  there  was  a  belt  of  Government 
land,  lying  between  the  two  belts  of  settlement  about 
the  respective  county  seats,  which  the  road  coveted,  and 
if  the  line  passed  through  the  old  towns  there  would  be 
but  little  chance  for  speculative  directors  to  profit  by 
laying  out  town  sites.  So  the  road  was  laid  out  and 
built  through  the  unsettled  lands,  avoiding  every  old 
town  in  its  route.  New  towns  were  laid  out  to  suit 
the  views  of  the  land  company,  and  the  line  of  the  road 
was  curved  about  according  as  the  ten-  or  twenty-mile 

241 


BOSSISM   AND    MONOPOLY 

limit  of  the  grant  could  produce  more  or  less  land.  As 
a  result,  the  old  settlers,  who  had  borne  the  brunt  of 
peril  and  hardship  in  opening  up  the  country,  found 
their  farms  still  far  from  the  advantages  of  rail  trans- 
portation, and  the  townspeople  saw  their  business  mo- 
nopolized by  the  new  trading  points,  with  which  they 
could  not  compete  on  account  of  the  facilities  the  latter 
had  through  railway  transportation." 

Bond-inflation  and  stock-watering  are  responsible 
for  much  of  the  evils  of  discrimination.  From  the 
attempt,  usually  successful,  to  pay  interest  on  money 
which  was  never  invested  and  dividends  on  stock  which 
represents  no  property,  and  often  not  a  cent  of  outlay, 
flows  discrimination,  extortion,  and  robbery  of  the  peo- 
ple. The  people  have  been  deceived  by  appearances, 
and  have  not  generally  taken  the  trouble  to  investigate 
and  calculate  for  themselves. 

The  advantages  of  rebates  and  discriminations  have 
enabled  several  great  corporations,  called  "  trusts,''  to 
reap  the  enormous  gains  that  have  made  their  power 
felt.  We  may  take  the  Standard  Oil  Company  as  a 
fair  example.  Few  people,  reading  of  the  enormous 
profits  of  the  Standard  Oil  Company,  amounting  to 
from  fifty  to  seventy -five  million  dollars  per  annum, 
realize  the  sources  of  profit  amounting  to  so  colossal 
a  sum.  But  when  one  begins  to  study  the  subject,  with 
some  attention  to  detail,  such  profits  appear  not  only 
feasible  but  rather  conservative.  It  must  be  remembered 
that  even  at  the  prices  charged,  by  some  considered 
high,  it  is  by  far  the  cheapest  illuminating  material 
to  be  found,  and  on  farms  and  in  all  towns  and  vil- 
lages where  no  gas  or  electric  plants  have  been  estab- 
lished, it  is  the  only  economical  means  for  artificial 
light.  Not  only  so,  but  even  in  the  cities  there  are,  in 
the  aggregate,  hundreds  of  thousands  of  families  who 
find  the  use  of  kerosene  preferable  to  gas  from  an  eco- 

242 


DI  SCRIM  IN  A  TIONS 

nomic  standpoint,  and  sometimes  for  other  reasons;  it 
is  not  only  thus  in  the  United  States,  but  in  Europe  and 
South  America,  in  Australasia,  and  in  some  Oriental 
nations.  When  we  consider  that  the  Standard  Oil  Com- 
pany has  the  whole  world  for  a  market  and  enjoys  a 
monopoly  in  several  European  countries,  as  well  as  in 
all  this  country,  and  that  a  substantial  profit  is  realized 
for  it  upon  each  gallon  sold;  also  that  the  mineral  oil 
of  the  wells  yields  several  valuable  by-products;  also 
that  illumination  is  only  one  of  the  various  uses  of  min- 
eral oil  in  its  different  stages  of  perfection — we  no 
longer  wonder  at  the  financial  power  of  the  few  men 
who  possess  that  monopoly,  even  with  but  a  small  mar- 
gin of  profit  on  each  gallon  retailed  to  the  consumer. 
We  have  only  to  consider  the  bulky  character  of  the 
article,  even  in  its  most  highly  refined  condition,  to 
understand  that  transportation  is  by  far  the  most  im- 
portant problem  connected  with  its  manufacture  and  sale. 
Given  an  advantage  of  a  few  cents  per  barrel  in 
the  matter  of  freight  charge,  any  large  establishment 
backed  with  abundant  capital,  can  soon  drive  all  com- 
petition out  of  both  production  of  the  oil  and  the  refin- 
ing business.  Now  the  Standard  Oil  Company,  from 
its  first  organization  under  that  name  by  those  now  at 
the  head  of  the  New  Jersey  corporation,  constituted  the 
largest  single  shipper  of  freight  in  the  world,  and  could 
select  from  whichever  common  carrier  it  pleased  for  the 
larger  share  of  its  transportation.  It  was  not,  as  is  the 
ordinary  shipper,  subject  to  such  rates  as  some  particu- 
lar company  had  fixed,  but  was  in  a  position  to  almost 
dictate  its  own  rates.  The  management  of  the  company 
were  not  slow  to  discover  their  power,  nor  reluctant  to 
use  it  to  the  uttermost.  It  is  not  our  purpose  to  recount 
or  recite  the  many  facts  disclosed  before  various  legis- 
lative committees  and  in  judicial  proceedings  to  prove 
that  the  railway  companies  of  the  United  States,  as  well 

243 


BOSSISM    AND    MONOPOLY 

as  the  various  steamship  hnes,  are  practically  in  partner- 
ship with  Standard  Oil.  That  such  is  the  case  cannot 
be  now  treated  as  a  secret. 

If  anyone  expects  that  any  rate  legislation  will 
interfere  with  the  compact  between  that  colossal  insti- 
tution and  others  associated  with  it,  their  fiscal  opera- 
tions exceeding  those  of  the  United  States  Government, 
he  has  certainly  profited  but  little  from  a  study  of 
recent  legislative  and  judicial  history. 

Petroleum  has  for  over  twenty-five  years  ranked 
second  in  value  among  the  exports  from  the  United 
States,  and  in  some  years  during  that  period  it  has 
ranked  first.  The  Standard  Oil  Company  appears  to 
have  been  from  the  beginning  an  organization  of  men, 
possessed  of  large  financial  resources  and  great  business 
ability,  who  adopted  a  rule-or-ruin  policy.  Nothing 
would  be  gained  by  reiterating  all  the  tricks,  imposi- 
tions, misdeeds,  and  unfair  advantages  by  which  they 
obtained  and  retained  their  monopoly.  No  full  and 
complete  history  of  the  subterfuges,  concealments,  and 
high-handed  oppressions  for  which  principals  and  agents 
in  that  organization  are  responsible  can  be  given. 
Its  operations,  its  espionage,  competitive-price  wars, 
bribes  to  power,  purchases  of  favor,  intimidations,  be- 
trayals of  confidence,  maneuvers  and  strategies  for 
advantage,  defiance  of  law  in  many  forms,  masterly 
retreats  followed  by  victories,  ranging  through  more 
than  two  decades — and  its  final  triumph  in  the  acquisi- 
tion of  a  complete,  unchallenged  monopoly  not  only  of 
the  home  markets,  but  of  those  of  nearly  all  foreign 
nations — have  been  made  subjects  for  more  than  one 
very  interesting  volume.  When  one  studies  the  accounts 
given  by  Mr.  Lloyd  in  "  Wealth  against  Common- 
wealth," he  wonders  how  such  power  over  other  great 
corporations,  legislative  bodies,  even  judicial  officers,  to 
say  nothing  of  a  large  number  of  individuals,  was  ac- 

244 


DI  SCRIM  IN  A  TIONS 

quired  and  held;  and  how  any  small  body  of  men, 
however  industrious,  however  richly  endowed  with  busi- 
ness capacity  and  mastery  of  details,  could  keep  in 
force  and  effect  all  its  agreements,  and  manage  all  the 
subordinate  corporations  formed  and  employed  by  the 
parent  organization.  Good  fortune,  or  wonderful  sagac- 
ity, or  both,  must  be  conceded  to  them.  In  the  whole 
history  as  given  by  Mr.  Lloyd,  covering,  first  and  last, 
several  hundred  transactions — sometimes  of  a  business 
and  sometimes  of  a  political  or  quasi-public  nature,  and 
indicative  of  thousands  of  other  transactions — no  in- 
stance is  given  of  a  betrayal  of  the  confidence  or  interest 
of  Standard  Oil  by  anyone  in  its  employ.  It  appears 
to  have  been  an  unsolvable  mystery  to  that  author,  as 
it  has  been  to  many  other  persons,  that  such  great  and 
so  many  substantial  favors  in  the  form  of  rebates  and 
discriminations  were  uniformly  extended  to  the  Trust  by 
the  railroads,  apparently  the  carrying  out  of  a  common 
understanding  and  policy.  This  is  not  so  remarkable 
when  one  gives  thought  to  the  railroad  situation  during 
the  period  when  the  oil  monopoly  was  progressing  to- 
ward its  final  consummation.  That  consummation  was 
freedom  from  persistent  competition  in  the  field  of  pro- 
duction and  conquest  of  markets  at  home  and  abroad. 
From  1871,  when  the  associates  who  afterwards  consti- 
tuted the  Standard  Oil  Company  first  began  their  war 
of  extermination  and  conquest,  until  about  1887,  when 
the  last  rival  interest  of  formidable  proportions  had 
succumbed,  was  a  period  of  railroad-rate  wars  and  of 
frequent  and  serious  losses  resulting  therefrom.  Pooling 
agreements  were  frequently  made,  but  as  often  broken, 
and  demoralization  and  uncertainty  in  railway  finance 
was  the  rule  rather  than  the  exception.  So  precarious 
was  the  condition  of  many  roads,  and  so  narrow  the  mar- 
gin between  a  surplus  and  a  deficit,  that  the  patronage 
of  a  great  shipper,  such  as  was  the  Oil  Trust,  could  not 

245 


BOSSISM    AND    MONOPOLY 

be  lost  to  a  railroad  if  by  any  reasonable  concession  it 
could  be  retained.  Standard  Oil  had  so  contrived  and 
managed — no  matter  how — as  to  become  the  only  single 
shipper  of  oil  that  could  guarantee  such  a  quantity  of 
that  species  of  freight,  in  a  transportable  form,  as  would 
yield  a  certain  considerable  profit  to  all  railroads  pene- 
trating the  regions  of  production  in  crude  state.  The 
conditions  were  new  and  peculiar.  The  preparation  of 
petroleum  for  use  as  an  illuminant  in  large  quantities 
was  a  new  process,  calling  for  the  investment  of  large 
capital  and  the  employment  of  men  of  considerable  skill 
and  some  special  experience.  While  the  potential  mar- 
ket for  the  finished  product  was  world-wide  and  almost 
illimitable,  yet  the  actual  market  had  to  be  created  and 
cultivated.  While  that  was  the  situation  as  to  refined 
oil,  there  was  no  market  for  crude  oil  except  for  refin- 
ing, and  there  were  subterranean  rivers,  lakes,  and  acres 
of  crude  oil.  Now  there  is  this  peculiarity  about  natural 
oil:  It  can  be  reduced  to  possession,  in  form  ready  for 
the  manufacturer  (refiner),  with  less  labor  ill  propor- 
tion to  quantity  than  any  other  commercial  product, 
with  the  possible  exception  of  sand,  gravel,  clay,  etc. 
In  these  circumstances  thousands  of  men  forsook  other 
occupations  and  sought  riches  in  the  production  and 
sale  of  crude  oil.  At  first  a  few  fortunes  were  made 
quickly.  Speculators  got  between  production  and  con- 
sumption and  paid  the  well  owners  prices  which  enriched 
the  latter  in  a  short  time.  But  the  varying  fortunes 
of  the  speculators  is  another  story.  The  few  successes 
were  a  lure  to  a  perfect  craze  of  development,  and  of 
a  production  that  the  railroads  could  not  have  accom- 
modated with  transportation  had  they  devoted  all  their 
steam-power  to  oil — assuming  that  they  had  cars  adapted 
or  adaptable  to  the  purpose,  which  they  had  not,  except 
to  the  extent  of  a  very  small  percentage  of  the  actual 
demand   for  the  crude-oil  product.     The  utter  disap- 

246 


DISCRIMINA  TIONS 

pointment  and  ruin  of  the  vast  majorit}'  of  investors 
in  oil  land  was  inevitable,  whether  the  railroads  at- 
tempted to  furnish  transportation  or  not.  And  had  the 
roads  made  the  requisite  expenditures  to  provide  suit- 
able rolling  stock  of  adequate  capacity,  and  simply  had 
charged  actual  cost  of  transportation,  their  investment 
in  the  additional  rolling  stock  would  have  been  ulti- 
mately lost,  and  the  money  paid  them  by  the  producers 
would  merely  have  hastened  the  ruin  of  the  producers. 
Such  was  the  condition  of  the  oil  industry — if  it  may 
be  called  an  industry — in  the  early  seventies.  There 
were  possibilities  for  vast  profit  in  manufacturing  the 
crude  product  into  a  merchantable  commodity  and  plac- 
ing it  before  consumers.  But  the  consumers  had  to  be 
reached.  Here  was  the  opportunity  for  a  man,  or  set 
of  men,  having  the  foresight,  patience,  and  resources  of 
Jolui  D.  Rockefeller  and  those  whom  he  selected  for 
his  associates. 

Now  there  was  here,  as  in  every  industrial  situation, 
just  one  serious  problem,  and  that  was  one  of  transpor- 
tation. Let  any  man  be  given  rates  of  transportation 
of  a  large,  bulky  commodity  materially  less  than  others 
in  the  same  business,  and  his  fortune  is  made,  while  the 
others  must  remain  in  business,  if  at  all,  on  a  restricted 
scale,  and  only  so  long  as  the  favored  shipper  refrains 
from  driving  them  out  of  the  business.  That  is  the 
lesson  of  prime  importance  which  the  people  of  this 
country  should  hasten  to  learn.  It  is  not  a  new  lesson 
or  a  recent  discovery.  Mr.  Rockefeller  and  his  asso- 
ciates acquired  that  knowledge,  along  with  much  more, 
long  in  advance  of  even  our  most  gifted  and  trusted 
statesmen. 

Now  we  have  the  Rockefeller  association — whether 

then  known  as  the  Standard  Oil  Company  or  by  some 

other  name  is  immaterial — on  the  one  hand,  and  we  have 

the  railroad  situation,  as  above  described,  on  the  other. 

17  247 


BOSSISM    AND    MONOPOLY 

Too  much  valuable  time  and  energy  have  been  lost  in 
personal  abuse  and  appeals  to  passion,  and  too  little  to 
unbiased  statements  of  actual  conditions.  We  are  seek- 
ing a  popular  condemnation  and  overtlirow  of  the  pres- 
ent railroad  despotism,  in  wliich  Mr.  Rockefeller  and  his 
colossal  wealth  are  most  important  factors ;  but  that  end 
can  be  just  as  well  attained  without  misrepresenting  the 
past  methods  of  the  Oil  Trust  and  dealings  between  it 
and  the  railroads.  Those  publicity  preachers,  lecturers, 
and  editors  who  divert  public  attention  from  real  issues 
to  personalities  do  much  harm  to  the  cause  which  most 
concerns  the  people,  wliile  doing  no  harm  to  the  persons 
assailed.  It  should  be  recalled  that  at  the  date  here 
referred  to,  the  "  private-business  "  attitude  of  railroad 
companies  was  scarcely  challenged.  The  "  trust "  evil 
had  attracted  hardly  any  attention ;  so  that  the  enter- 
ing into  such  a  private  "  gentleman's  agreement,"  as 
has  been  often  charged  and  fairly  proved  against  Stand- 
ard Oil  and  the  railroads,  would  never  perhaps  have 
been  seriously  commented  upon  had  it  not  been  for  re- 
sults wliich  were  probably  a  surprise  to  one  or  both  the 
parties  mostly  interested.  Many  elements  enter  into  the 
traffic  policy  of  a  railroad  company;  but  two  consid- 
erations are  of  primal  importance  in  fixing  a  rate: 
(1)  The  volume  of  the  traffic,  and  (2)  the  uniformity, 
permanency,  or  continuity  of  the  supply  to  be  carried. 
Now,  without  some  controlling  hand  in  the  oil  business 
to  regulate  the  supply  and  maintain  uniformity  and 
adequacy  of  price,  both  these  elements  were  lacking. 
Add  to  this  the  fact  that  petroleum,  in  whatever  state 
sliipped,  is  among  the  most  hazardous  commodities  to 
handle,  and  we  have  a  very  strong  argument  in  favor 
of  the  railroads  adopting  the  first  feasible  plan  offered 
them  for  a  solution  of  the  oleaginous  strife.  At  this 
juncture  Standard  Oil  comes  forward  with  a  proposi- 
tion either  to  ship  a  certain  large  quantity,  or  all  the 

248 


D I  SCRIM  IN  A  TIONS 

supply  that  it  could  control,  by  rail,  and  to  guarantee 
an  average  profitable  rate.  But  in  order  to  make  the 
volume  of  that  traffic  sufficiently  large  to  be  profitable 
to  the  railroads,  and  to  insure  uniformity  of  volume, 
that  oil  company  must  be  conceded  the  right  to  unite 
with  the  companies  in  fixing  the  rates.  That  meant 
practically  that  the  rate-making  power  was  to  be  dele- 
gated to  it.  The  rates  must  be  high  enough,  as  pub- 
lished, to  suppress  production  except  for  delivery  to 
that  company,  but  low  enough,  in  fact,  to  enable  it  to 
meet  foreign  competition  and  any  local  competition  that 
might  spring  up  in  this  country.  Without  these  con- 
cessions the  trust  could  not  guarantee  the  two  things 
desired  by  the  railroad  managers.  There  was  only  one 
method  by  which  these  ends  could  be  attained,  and  that 
one  was  a  resort  to  the  rebate.  The  volume  of  the 
traffic  was  so  large,  in  comparison  with  other  kinds  of 
freight,  that  even  a  low  rate,  so  long  as  it  meant  a 
profit,  made  considerable  difference  in  the  net  earnings 
of  some  of  the  initial  roads,  and  was  a  strong  argument 
in  favor  of  its  acceptance.  At  that  time  our  industrial 
development  was  still  in  what  may  be  called  its  infancy, 
and  the  difference  between  accepting  and  rejecting  the 
proposition  of  the  trust  might  be  the  difference  between 
continuing  to  pay  interest  to  bondholders  and  salaries 
to  officers,  and  going  into  the  hands  of  a  receiver,  espe- 
cially if  some  rival  road  should  accept  it.  The  reason- 
ing from  a  business  standpoint  was  sound,  whatever  may 
be  said  about  the  morality  of  the  transaction.  It  is 
sound  as  applied  between  the  railroads  and  all  the  trusts, 
and  the  practice  has  prevailed,  and  will  be  continued,  as 
long  as  the  roads  are  in  private  hands,  no  matter  what 
laws  are  passed  by  Congress  or  the  States.  The  disposal 
of  transportation  at  wholesale  to  a  manufacturing  mo- 
nopoly is  possible ;  it  is  seldom  possible  in  the  absence  of 
such  monopolists. 

249 


BOSSISM    AND    MONOPOLY 

Having  agreed  with  one  road,  there  was  little  diffi- 
culty in  agreeing  with  others.  In  addition  to  the  fear 
of  loss,  which  meant  the  gain  of  a  competing  line,  there 
was  the  influence  of  example,  as  strong  with  railroad 
officials  as  with  any  other  class.  But  Standard  Oil  did 
not  have  to  rely  solely  upon  agreement.  From  the  ver}^ 
start  those  in  its  control  were  in  control  of  large  reve- 
nues. Even  in  the  seventies  its  annual  profits  ran  into 
the  millions.  It  was  always  in  control  of  more  money 
than  any  single  institution  in  the  country ;  and  it  was 
at  all  times  ready  to  wield  the  power  thus  given  to 
force  obedience  to  its  will.  If  a  railroad  management 
proved  recalcitrant,  why,  the  trust  could  go  into  the 
stock  market  and  depress  the  price  of  the  stock  to  a 
lower  figure — and  it  was  a  period  when  railroad  stocks 
were  already  depressed.  If  this  did  not  bring  them  to 
terms,  it  could  turn  buyer,  and  soon  obtain  enough  of 
the  stock  to  change  either  the  disposition  or  the  per- 
sonnel of  the  management.  A  well-paid  railroad  official 
likes  his  job  as  well  as  others.  And  for  this  reason, 
among  others,  since  Congress  cannot  eliminate  self- 
interest  and  wholesome  fear  from  the  breasts  of  railway 
managers,  abolish  the  stock  markets,  or  get  control  of 
the  cash  resources  of  the  "  community  of  interest,"  any 
rate  legislation  it  may  enact  will  prove  as  abortive  in 
the  future  as  in  the  past.  But  the  evil  against  which 
the  legislation  is  directed  will  be  easily  corrected  if  the 
other  and  direct  route  be  taken,  namely,  the  substitution 
of  the  Government  itself  for  one  of  the  parties  to  rebate 
and  discriminatory  agreements. 

Resuming  our  account.  Standard  Oil  succeeded  in 
grafting  its  rebate  arrangement,  in  some  form,  upon 
every  important  railway  system  in  the  United  States, 
and  probably  upon  all  ocean  lines ;  nor  has  this  power 
of  the  monopoly  diminished ;  on  the  contrary,  it  has 
vastly  augmented.     No  corner  of  the  Republic  is  suffi- 

250 


D I  SCRIM  IN  A  TIONS 

ciently  remote  to  secure  exemption.  As  soon  as  the 
California  oil  fields  proved  that  they  could  furnish  a 
permanent  supply,  the  railroads  having  lines  there, 
under  orders  from  Standard  Oil,  established  prohibitory 
rates  and  then  permitted  the  "  Trust "  to  construct  a 
pipe  line  to  tide  water  upon  its  right  of  way,  from  which 
the  road  receives  rentals  in  lieu  of  its  share  of  freight 
rates.  And  such  is  said  to  be  the  practice  as  between 
the  "  Trust  "  and  all  railroads  upon  whose  trackways 
pipes  have  been  constructed. 

The  Standard  Oil  Company  has  practically  mo- 
nopolized the  oil  markets  of  the  world;  and  while  it 
cannot  be  justly  charged  with  exacting  an  exorbitant 
price  for  oil,  yet,  no  doubt,  its  prices  are  fixed  with  a 
view  to  encouraging  larger  consumption  and  yielding 
the  maximum  of  profit.  Its  income  has  grown  from  ten 
millions  per  annum,  in  the  seventies  and  early  eighties,' 
to  thirty,  then  forty,  and  then  fifty  millions  a  year,  the 
latter  sum  being  fifty  per  cent  dividends  on  its  capi- 
taHzation  of  $100,000,000. 

That  the  railroad  trust  is  the  basis  and  mainstay 
of  all  other  trusts.  Governor  La  Follette,  though  stand- 
ing for  rate  legislation  rather  than  government  owner- 
ship, bears  testimony  as  follows :  "  In  whatever  way 
railroad  managers  have  veiled  their  designs  by  greater 
diplomacy  and  finer  phrasing,  they  have,  with  a  sole 
regard  to  their  own  gain,  given  to  every  community  in 
the  country  good  service  or  bad,  with  discrimination  or 
otherwise,  at  as  high  rates  as  they  desired  to  make,  and 
the  only  alternative  offered  to  the  public  has  been,  and 
still  is,  to  pay  up  or  '  walk.'  Under  this  system  a  few 
men  have  grown  very  rich,  a  few  cities  have  been  made 
very  great  commercial  centers.  But  equality  of  oppor- 
tunity has  been  destroyed  for  the  individual  or  the  inde- 
pendent business  enterprise,  and  in .  thousands  of  com- 
munities the  natural  advantages  for  growth  have  been 

251 


BOSSISM    AND    MONOPOLY 

nullified,  development  arbitrarily  dwarfed,  and  all  com- 
mercial activities  limited  to  mere  local  distribution. 
There  would  be  no  Standard  Oil  monopoly  to-day,  no 
meat  monopoly,  no  coal  monopoly,  no  grain  monopoly, 
no  great  combinations  filling  the  entire  industrial  field 
and  destroying  all  industrial  independence  and  freedom, 
no  sacrifice  of  cities  and  towns  in  every  State  to  the 
great  markets  at  railway  terminals — in  short,  there 
would  not  have  been  imposed  upon  the  American  people 
a  system  which  presents  to  this  generation  the  gravest 
problem  that  has  confronted  democracy,  ...  if  the 
Federal  Government,  in  the  exercise  of  its  lawful  au- 
thority, had,  for  the  last  thirty  years,  fully  discharged 
its  duty  to  the  people  who  maintain  it,  by  controlling 
railway  services  and  railway  rates  on  all  interstate 
commerce." 

It  is  a  great  mistake  to  suppose  that  the  partner- 
ship between  the  railroad  and  the  "  Beef  Trust "  is  of 
recent  formation.  The  discriminations  by  the  railroads 
in  favor  of  the  millionaire  packers  had  their  origin  as  far 
back  as  1873,  and  have  continued,  and  been  more  and 
more  pronounced  down  to  the  present.  And  to-day  the 
railroads  are  the  mainstay  of  the  "  Beef  Trust."  Dur- 
ing all  these  years  the  railroads  have  given  rates  to  the 
dressed  beef  men  which  they  refused  other  shippers  of 
live  stock,  though  the  latter  were  ready  to  ship  by  the 
carload  or  even  by  the  trainload. 

It  is  not  within  the  scope  of  this  work  to  go  into 
the  almost  limitless  schemes  and  operations  by  which  the 
"  Beef  Trust "  has  been  built  up.  They  have  been 
very  ably  and  thoroughly  explained  and  exposed  in  a 
series  of  articles  by  Mr.  E.  F.  Russell,  in  Everybody's 
Magazine,  beginning  with  the  February  number,  1905, 
under  the  title,  "  The  Greatest  Trust  in  the  World." 
He  states  and  proves  that  the  chief  weapon  and  instru- 
mentality in  the  creation  and  success  of  the  trust  are,  and 

252 


DI  SCRIM  IN  A  TIONS 

have  been  from  its  incipiency,  rebates  given  and  discrimi- 
nations practiced  by  the  railroads — another  argument 
for  the  overthrow  of  the  railroad  oligarchy  and  for 
government  ownership.  The  account  given  by  Mr. 
Russell,  together  with  official  records  in  relation  to  the 
"  Beef  Trust,"  constitutes  a  strong  illustration  of  the 
folly  of  expecting  any  relief  against  railroad  abuses, 
or  from  the  trusts  built  up  and  fostered  thereby,  by 
rate  legislation  or  official  action.  The  young  man  with 
a  great  and  honored  name  who,  having  been  made  chief 
of  the  Bureau  of  Corporations  and  Publicity  (that  may 
not  be  the  exact  name),  started  in  to  investigate  the 
"  Beef  Trust."  He  found  that  it  was  making  so  little 
money  that  it  "  is  almost  a  charitable  institution,"  as 
one  editor  expressed  it.  But,  aside  from  Mr.  Garfield's 
report,  we  know  that,  with  a  diminishing  supply  of  live 
stock  for  butchering,  the  prices  to  stockraisers  have  been 
reduced,  until  thousands  of  farmers  throughout  the  en- 
tire West  have  been  ruined,  and  with  them  many  banks, 
heretofore  solvent,  have  failed;  that  losses  aggregating 
many  millions  in  money  and  scores  of  suicides,  have  re- 
sulted ;  that  prices  to  butchers,  instead  of  being  reduced 
correspondingly,  have  been  raised  from  twenty-five  to 
fifty  per  cent.  And,  finally,  we  know  that  the  "  ami- 
able "  arrangement  between  the  "  Trust  "  magnates  and 
between  them  and  the  railroads  has  not  been  disturbed, 
but  is  made  to  yield  the  "Trust"  $25,000,000  per 
annum  in  rebates  and  rentals  alone,  to  say  nothing  of 
profits  on  the  traffic,  which  are  probably  twice  as  much 
more.  No  wonder  Standard  is  willing  to  have  Mr.  Gar- 
field investigate  the  Standard  Oil  Company. 

But  the  area  of  meat,  fruit,  and  vegetable  produc- 
tion is  so  vast  and  their  consumption  so  universal,  that 
the  monopoly  must  fail  as  soon  as  the  advantage  given 
it  by  the  railroads  is  taken  away.  As  evidence  that 
the  railroads  were  responsible  for  the  private-car  form 

253 


BOSS  ISM    AND    MONOPOLY 

of  rebate,  and  that  they  were  not  helpless  victims  of 
the  packers,  attention  is  called  to  the  fact  that  many 
exclusive  contracts  with  the  combination  of  packers 
have  been  canceled.  The  Chicago,  Rock  Island  &  Pa- 
cific Railroad,  whose  lines  extend  throughout  the  West, 
Northwest,  South,  and  Southwest,  has  recently  put 
on  1,500  refrigerator  cars  to  accommodate  the  meat, 
fruit,  and  vegetable  traffic  on  its  lines.  Other  great 
systems  have  arranged  and  are  arranging  to  follow  its 
example.  But  the  railways  will  henceforth  collect  most 
of  the  unfair  profit  heretofore  paid  to  the  "  Trust." 
One  monopoly  will  thus  disappear,  but  its  weapons  will 
be  simply  passed  over  to  a  greater. 

Since  1870  practically  the  entire  source  of  supply 
of  anthracite  coal  in  the  country  has  passed  into  the 
hands  of  certain  railroads.  These  have  passed  forever 
from  private  citizens.  The  railroads  first  got  posses- 
sion of  some  of  the  most  productive  anthracite  fields, 
and  by  putting  the  rates  of  transportation  unreason- 
ably high,  and  neglecting  to  furnish  cars  to  others  than 
themselves — except  after  they  had  glutted  the  market 
and  reduced  the  price — froze  out  their  competitors  and 
forced  them  to  sell  at  the  railroads'  own  price.  The 
companies  now  in  control  of  the  nation's  anthracite  sup- 
ply promulgate  and  maintain  a  high  freight  rate  on 
the  product,  notwithstanding  that  nearly  all  they  re- 
ceive for  transportation  is  their  own.  The  large  stock- 
holders of  the  railroad  companies  have  incorporated 
themselves  into  coal  companies,  in  the  names  of  which 
they  mine  and  sell  the  coal  at  exorbitant  prices,  which 
they  seek  to  justify  in  part  by  pointing  to  these  high 
freight  charges.  In  some  instances  they  continue  to  use 
the  names  of  the  original  individual  owners.  Not  sat- 
isfied with  owning  the  supply  of  anthracite,  the  rail- 
roads began,  many  years  ago,  employing  the  same 
instruments  of  warfare  against  the  owners  of  bituminous 

254 


DISCRIMINATIONS 

coal,  and  have  continued  to  absorb  the  best  fields.  As 
long  ago  as  1888  a  congressional  investigating  com- 
mittee reported  that  railroad  syndicates  were  buying 
all  the  best  bituminous  coal  lands  along  their  lines  in 
Missouri,  Kansas,  Colorado,  Arkansas,  Tennessee,  Ala- 
bama, and  other  States  and  Territories,  no  doubt  with 
a  view  of  levying  tribute  upon  the  people's  fuel  and 
the  industrial  fires  of  the  country.  Some  one  recently 
called  attention  to  the  fact  that  many  poor  people  in 
the  cities  had  found  a  way  to  beat  the  anthracite  mo- 
nopoly. They  were  learning  how  to  avoid  the  obnoxious 
qualities  of  bituminous  coal,  and  to  use  that.  But  now 
come  the  railroads  and  give  an  upward  twist  to  rates 
for  the  transportation  of  bituminous  coal,  and  thus 
close  the  last  avenue  of  escape  for  the  poor  of  the  cities, 
who  must  pay  fancy  prices  for  even  a  poor  quality  of 
coal,  or  freeze.  When  it  is  the  policy  of  the  railroad 
owners  of  most  of  the  coal  to  have  a  large  output  they 
furnish  sufficient  cars;  at  other  times,  if  found  neces- 
sary to  create  scarcity  and  a  pretext  for  a  raise  in  the 
price,  they  furnish  few  cars,  or  none  at  all. 

It  is  one  of  the  stock  arguments  against  rate  regu- 
lation— and,  of  course,  made  to  do  service  when  govern- 
ment ownership  is  proposed — that  rates  have  consider- 
ably and  constantly  decreased  within  the  last  thirty 
years.  That  the  reduction  in  the  rates  is  in  the  interest 
of  the  railroads,  and  has  not  been  made  because  it 
benefits  the  public,  is  shown  by  the  fact  that  where  an 
increase  of  the  rate  can  be  squeezed  out  of  the  coal  traffic 
the  companies  have  not  been  slow  to  increase  it,  what- 
ever the  injury  to  the  public. 

Coal  is  an  article  of  greater  volume  than  any  other 
product  carried  by  the  railroads,  and  amounts  to  not 
less  than  200,000,000  tons  a  year.  The  cost  of  its  pro- 
duction has  been  largely  reduced  by  new  forms  of  ma- 
chinery and  new  methods  of  loading  and  unloading ;  and 

255 


BOSSISM    AND    MONOPOLY 

cars  of  increased  capacity,  as  well  as  more  durable 
tracks,  have  been  constructed  in  recent  years,  so  that 
not  only  the  product  of  mines  but  the  transportation 
should  show  a  reduction  of  fifty  per  cent.  And  yet  the 
fact  has  been  abundantly  established,  no  less  by  com- 
mon experience  and  market  quotations  than  by  evidence 
in  litigations  and  investigations  by  commissions,  that 
transportation  rates  for  coal  have  largely  increased 
and  prices  to  consumers  steadily  advanced,  though  made 
to  constantly  fluctuate — sometimes  higher  than  at  other 
times,  but  always  high,  according  to  the  absorbing 
power  of  the  market.  At  all  times  rates  have  been  so 
adjusted  as  to  realize  to  the  railroad-coal  trust  the 
largest  cash  income.  By  these  high  prices  and  by  the 
fluctuations,  the  independent  coal  producers  have  been 
killed  off'  one  by  one  and  forced  to  sell  to  the  monopoly. 
In  the  period  succeeding  the  depression  of  1893  to 
1898,  the  people  to  a  great  extent  lost  sight  of  the 
exactions  of  the  railroad-coal  trust,  but  the  investiga- 
tion by  the  arbitration  committee  appointed  by  the 
President  in  1902  gave  the  public  a  glimpse  of  the  true 
state  of  aff'airs.  But  that  had  mostly  to  do  with  the 
labor  phase  of  the  subject.  The  people  appear  to  have 
accepted  the  coal  monopoly  as  an  established  institution 
and  to  have  become  in  a  measure  reconciled  to  the  preva- 
lent high  prices.  There  has  been  no  special  inquiry  in 
recent  years.  Is  this  because  of  the  influence  of  the 
railroad-coal  trust  in  the  halls  of  legislation.''  But  in- 
vestigations were  made  in  1888,  both  by  State  and 
Federal  committees,  and  the  uniform  finding  was  that 
the  railroad  companies  engaged  in  mining  and  trans- 
porting coal  were  practically  in  a  combination  to  con- 
trol the  output  and  fix  the  price;  that  they  had  a 
practical  monopoly  of  production  and  sale;  that  it  was 
a  common  practice  with  them  to  run  mines  in  the  names 
of  private  operators   and   other  companies   formed   by 

256 


DISCRIMINA  TIONS 

the  railroad  managers,  the  better  to  conceal  their  opera- 
tions and  deceive  the  public. 

Such  is  the  spirit  and  dominating  idea  of  all  the 
great  monopolies;  and  among  them  no  one  factor  has 
been  half  so  potent  and  active  in  effecting  an  entire 
revolution  in  the  methods  of  monopolizing  the  meat 
supply  of  the  United  States  as  the  combination  of  rail- 
roads. The  railroads  are  responsible  for  the  Standard 
Oil  monopoly — for  that  which  refines  and  sells  oil,  as 
well  as  for  the  syndicate  known  by  that  name. 

Oppressive  and  ruinous  discriminations  were  the  more 
direct  causes  for  the  recent  agitation  for  congressional 
legislation  on  the  subject  of  railroad  transportation. 
But  if  indications  count  for  anything,  not  even  the 
general  complaints  against  that  grievous  abuse  will  re- 
sult in  anything  more  than  a  mere  farcical  attempt  at 
providing  a  remedy.  .  The  disposition  of  the  Senate 
committee  is  evidently  to  excuse  or  justify  discrimina- 
tions, as  is  evidenced  by  its  proceedings  thus  far.  Its 
first  witness  was  an  attorney  for  the  Atchison,  Topeka 
&  Santa  Fe  Railway.  A  member  of  the  committee 
asked  this  penetrating  and  dazzling  question :  "  Where 
traffic  managers  violate  the  law  in  granting  rebates  and 
discriminations  to  one  shipper,  do  you  think  it  would 
be  right  to  compel  the  road  to  give  aU  shippers  the  low 
rate  .'*  "  This  was  the  cue  already  prepared,  and  ar- 
ranged for  an  argument  by  the  attorney  in  favor  of 
the  practice  of  granting  rebates  and  discriminations. 
That  was  one  purpose  for  which  he  had  sought  to  be 
called  before  the  committee  and  which  prompted  it  in 
sending  for  him.  The  other  purpose  was  that  he  might 
produce  an  argument  before  the  committee  as  to  the 
rebates  and  discriminations  of  which  Secretary  of  the 
Navy  Morton  was  guilty — an  argument  justifying  him 
to  be  the  basis  of  a  whitewashing  report.  Such  argu- 
ment the  astute  attornev  proceeded  to  make.     Thus  it 


BOSSISM    AND    MONOPOLY 

is  seen  that  the  same  conditions  prevail  while  the  com- 
mittee is  sitting,  and  characterize  its  proceedings,  as 
have  long  prevailed  at  sessions  of  the  Senate.  The  hired 
counsel  for  great  favored  interests  are  on  hand ;  so  are 
the  railroad  presidents  and  lobbyists.  But  the  other 
side — the  side  which  the  Senate  and  its  committees  are 
supposed  to  represent — are,  in  fact,  absent  and  unrep- 
resented. Does  anyone  suppose  that  any  senator,  not 
interested  for,  or  in  sympathy  with,  the  railroads,  would 
ask  such  a  question  as  that  asked  by  the  committeeman? 

Many  credulous  people  had  supposed  that  the  Elkins 
committee  had  about  concluded  its  labors  and  would  have 
a  bill  of  far-reaching  import  all  ready  to  introduce  at 
the  opening  of  Congress  on  the  4th  day  of  December, 
1905.  But  it  is  more  apparent  from  day  to  day  that 
the  history  of  the  Interstate  Commerce  Act  is  to  be  re- 
peated in  any  measure  that  the  railroad  trust  will  finally 
permit  to  be  enacted.  An  Associated  Press  dispatch 
from  Washington,  dated  October  25,  1905,  was  in  part 
as  follows :  "  The  committee  will  take  up  the  entire  sub- 
ject as  if  no  bill  had  been  considered  heretofore,  but  it  is 
expected  that  the  chairman  will  be  prepared  to  present  a 
measure  of  his  own  as  a  basis  for  discussion.  Senator 
Foraker  also  has  a  bill  which  will  receive  consideration. 
It  is  expected  that  when  once  convened  the  committee 
will  continue  its  work  until  the  opening  of  Congi'ess  on 
December  4th,  and  it  is  by  no  means  probable  that  it 
will  conclude  by  tliat  time." 

No  higher  authority  could  be  cited  as  to  the  power 
possessed  and  facilities  offered  by  transportation  lines 
to  the  formation  of  industrial  and  trading  monopolies, 
and  as  to  the  extent  to  which  that  power  is  exerted  to 
support  and  perpetuate  them,  than  the  present  Federal 
Interstate  Commerce  Commission.  After  a  long  recital 
of  abuses  and  a  confession  of  its  inability  to  grapple 
with  them,  the  commission,  in  its  twelfth  annual  report, 

258  ^ 


DISCRIMINA  TIONS 

dated  January  11,  1899,  states  that  it  "  has  no  specific 
remedy  to  suggest  which  would  not  involve  resort  to 
measures  of  so  radical  a  nature  as  would  doubtless  pre- 
clude its  adoption."  Then  it  says :  "  We  are  of  the 
opinion  that  to  avoid  the  discriminations  and  grievous 
inequalities  now  existing,  the  Government  must  ulti- 
mately, in  some  form  or  other,  assume  such  measure  of 
control  over  railroad  rates  and  management  as  will 
restrict  excessive  competition  and  insure  to  all  shippers, 
large  and  small,  rich  and  poor,  strong  and  weak,  the 
same  rights  and  privileges  in  everything  pertaining  to 
railway  service." 

The  commissioners  evidently  have  in  mind  govern- 
ment ownership  as  the  only  effective  remedy,  but  lack 
the  courage  to  express  their  true  convictions.  But  the 
facts  recited  and  the  views  expressed  by  them  in  their 
reports  lead  irresistibly  to  one,  and  only  one,  conclu- 
sion, and  that  is  that  the  people  of  the  United  States 
must,  in  their  organized  capacity,  sooner  or  later,  own 
and  operate  the  railroads. 

It  is  impossible  to  ever  relieve  the  people  of  the 
serious  and  manifold  evils  arising  from  discriminations, 
extortion,  and  oppression  so  long  as  the  power  to  im- 
pose the  most  onerous  taxation  is  farmed  out  to  a  few 
little  sovereignties,  each  imposing  "  all  the  traffic  will 
bear  "  within  its  allotted  domain,  to  satisfy  the  insati- 
able greed  of  the  holders  of  inflated  indebtedness  and 
watered  stock.  The  only  remedy  is  national  ownership, 
and  the  imposition  of  only  such  rates  as  will  pay  the 
lowest  rate  of  interest  at  which  the  Government  can 
float  the  bonds  for  the  purchase  of  the  means  of  trans- 
portation at  what  it  would  cost  to  replace  them,  with 
expenses  of  operation  and  repairs  added. 


259 


CHAPTER    XII 

EVILS  OF,  AND  ABUSES  BY,  RAILROADS  IN  PRIVATE  HANDS 

DANGERS     TO     EMPLOYEES     AND     PASSENGERS,     AND 

DISCOMFORTS    OF    TRAVEL 

In  "Case  of  the  Monopolies"  (11  Coke,  84,  85), 
Lord  Coke  declared,  three  hundred  years  ago,  as  among 
other  results  of  monopoly,  that  the  price  will  be  raised 
while  the  commodity  is  not  as  good  as  before. 

A  wholesale  condemnation  of  railroad  management, 
with  respect  to  precautions  and  the  lack  of  precautions 
to  prevent  accidents  and  loss  of  life  in  that  business, 
could  not  do  justice  to  them,  or  to  the  employees  where 
lives  are  always  endangered,  or  to  the  public,  who  must 
occasionally  incur  the  risks  of  traveling  by  rail,  with- 
out first  ascertaining  what  proportion  are  due  to  care- 
lessness or  indifference  of  the  management  and  what 
proportion  would  have  occurred  under  the  most  skillful 
and  cautious  management.  In  the  nature  of  the  case, 
the  acquisition  of  such  knowledge  is  impossible.  That 
much  recklessness  and  indifference  attend  their  opera- 
tions is  attested  by  the  Interstate  Commerce  Commis- 
sion, which,  in  1902,  made  a  very  elaborate  report  on 
the  subject.  The  report  was  largely  statistical,  but 
considerable  space  was  devoted  to  showing  the  failure 
of  managements  to  introduce  safety  appliances,  a  full 
discussion  of  which  would  occupy  more  space  than  can 
be  here  devoted  to  the  subject.  But  it  may  be  truly 
stated  tliat  railroads  have  shown,  in  an  extreme  degree, 
the  disposition  common  to  all  monopolies  to  refuse  the 

260 


DANGER  TO  EMPLOYEES  AND  PASSENGERS 

adoption  of  labor-saving  and  safety-securing  inventions 
where  the  dividend  account  would  not  be  at  once  favor- 
ably affected  by  their  introduction.  The  statistics  show 
that  the  number,  both  of  employees  and  of  passengers, 
who  are  killed  and  injured,  in  proportion  to  those  em- 
ployed and  carried,  are  largely  in  excess  of  the  cor- 
responding numbers  in  any  other  country.  Especially 
does  this  discrepancy  against  the  railroads  of  the 
United  States  strikingly  appear  when  comparison  is 
made  between  them  and  the  government-owned  railroads 
in  Europe,  notwithstanding  that  the  speed  of  trains  in 
European  countries  is  much  greater,  on  an  average,  and 
the  population  much  denser.  This  should  satisfy  the 
most  skeptical  that,  even  aside  from  the  neglect  to  adopt 
and  use  modern  inventions,  many  such  accidents  and 
much  loss  of  life  which  now  occur  would  be  saved,  and 
quicker  service  secured,  under  public  than  under  private 
control.  Under  the  former,  the  public  service,  comfort, 
and  safety,  rather  than  private  profit,  being  the  main 
object,  more  care  would  undoubtedly  be  taken,  and  im- 
provements and  safety  appliances  would  be  introduced 
as  rapidly  as  possible.  The  figures  of  record  with  the 
commission  representing  deaths  and  accidents,  in  1904, 
are  positively  startling,  and  alone  constitute  a  strong 
argument  for  such  change  of  control  as  will  better  pro- 
tect employees  and  the  public.  The  deaths  from  acci- 
dent on  interstate  roads  for  the  year  ending  June  30, 
1904,  were  reported  at  9,984,  and  the  injuries  that 
were  not  fatal  at  78,247.  In  the  last  ten  years  Prussia 
has  reduced  the  average  of  railway  accidents  from  6.8 
per  million  train  kilometers  to  5.07.  Accidents  are 
three  times  as  frequent  in  the  United  States.  Prussia 
has  government  ownership. 

Mr.  Daniel  T.  Pierce,  in  Public  Opinion,  of  May 
27,  1905,  presents  the  question  of  relative  safety,  and 
of  use  of  safety   appliances,  in   a  strong  light.      The 

261 


BOSSISM    AND    MONOPOLY 

comparison  is  made  between  the  privately  owned  system 
of  the  United  States  and  the  government-controlled  sys- 
tem of  Great  Britain.  He  says :  "  The  fact  remains, 
nevertheless,  the  English  railways  carry  twice  as  many 
passengers  as  ours  do  in  a  year,  and  kill  and  injure  only 
one-tenth  as  many  of  these  passengers.  To  put  the 
case  otherwise,  our  railroads  killed  10,000  people  and 
injured  75,000  last  year.  English  railroads  in  the  same 
year  killed  only  1,150  and  injured  6,785.  There  is 
still  another  way  of  making  the  exhibit: 

One  passenger  in  2,316,648  is  killed  in  the  United  States 
<«  (t 

"     employee 


8,461,309 

" 

Great  Britain 

139,740 

injured  " 

United  States 

470,848 

"          " 

Great  Britain 

399 

killed     " 

United  States 

916 

" 

Great  Britain 

26 

injured  " 

United  States 

116 

" 

Great  Britain 

At  the  very  lowest  valuation  these  figures  show  that 
slaughter  and  maiming  by  railways  can  be  reduced  to 
a  minimum.  There  is  no  mystery  in  this.  English 
railways  kill  and  injure  only  one-tenth  (it  is  really  one- 
twentieth  if  the  relative  number  of  passengers  is  con- 
sidered) as  many  people  as  are  killed  and  injured  here, 
simply  because  the  English  roads  are  equipped  with 
safety  devices  and  systems  which  our  roads  are  not 
compelled  to  adopt." 

Although  sanitary  science  has  made  great  progress 
and  inventive  genius  has  been  providing  the  most  per- 
fect appliances,  it  is  remarkable  that  railway  managers 
have  done  so  little  toward  providing  facilities  for  prop- 
erly ventilating  their  passenger  coaches  and  sleeping 
cars.  The  deleterious  effects  upon  health  of  poor  ven- 
tilation have  been  recognized  in  every  other  place.  Even 
poorly  ventilated  tenements   are   placed  under  the  ban 

262 


DANGER  TO  EMPLOYEES  AND  PASSENGERS 

of  the  law,  and  systematic  attempts  have  been  made  to 
secure  adequate  ventilation  of  factories  and  other  places 
of  employment.  But  although  of  all  places  where 
human  beings  are  compelled  to  congregate  a  railway 
car  should  and  could  be  the  most  perfectly  ventilated, 
no  sufficient  appliances  have  been  introduced.  None 
except  those  of  robust  constitution  and  soundest  lung 
and  heart  travel  free  from  peril  to  health  or  life.  It 
is  either  a  window  up  or  down  or  a  transom  open  or 
shut.  Either  a  chilling  draft  or  stagnant  deoxygenized 
poison.  The  injury  that  these  conditions  have  done  to 
health  is  incalculable.  The  deaths  due  to  the  murder- 
ous neglect  of  those  whose  duty  it  was  to  see  to  the 
comfort  and  safety  of  the  traveling  public  have  not 
been  numbered,  but  are  many.  No  less  criminal  are 
the  conditions  with  respect  to  heating  the  cars.  As  a 
rule,  the  coaches  in  winter,  spring,  or  fall  are  of  a  tem- 
perature ranging  from  about  that  of  furnace  heat  to 
arctic  coldness,  while  in  summer,  the  young  farmer, 
wearing  a  flannel  shirt,  exercises  the  railroad  privilege 
of  keeping  a  window  wide  open  and  throwing  a  draft 
upon  the  other  occupants  of  the  car.  Under  govern- 
ment ownership  the  sanitary  condition  of  public  con- 
veyances (including  street  cars)  would  be  looked  after 
by  boards  of  health,  and  these  grave  abuses  cor- 
rected. 

Another  intolerable  abuse  of  monopoly  privileges  by 
railroads  relates  to  proper  food  and  supplies  of  the  trav- 
eling public.  The  money-grabbing,  dyspepsia-breeding 
contrivance  known  as  the  railroad  lunch  counter  ought 
to  be  put  out  of  business.  Whereas,  it  could  make  a 
good  cup  of  coffee  or  tea  for  two  cents  and,  selling  at 
ten,  make  a  profit  of  eight  cents,  it  deals  out  a  vile 
concoction  at  a  cost  of  one  cent  and  realizes  a  profit  of 
nine  cents.  It  cuts  up  and  sells  inferior  articles  of 
pies,  cakes,  and  sandwiches  at  600  per  cent  profit, 
18  263 


BOSSISM    AND    MONOPOLY 

whereas,  it  might  sell  wholesome  foods  of  the  same  kind 
and  quantities  at  the  same  price  and  at  a  profit  of 
400  to  500  per  cent.  The  dining-car  service  is  gen- 
erally good,  but  the  prices  are  extortionate  for  the 
poorer  class  of  travel.  Even  the  moderately  well-to-do 
traveler  is  inclined  to  limit  his  orders  upon  an  inspec- 
tion of  the  price  list.  A  five-minute  lunch  at  the  way- 
side joint  above  described,  at  an  unusual  hour,  is  the 
only  alternative.  One  traveling,  even  on  business,  ought 
to  be  able  to  enjoy  in  some  degree  the  pleasures  of 
travel.  But  unless  he  has  a  plethoric  purse  he  must 
travel  with  considerable  discomfort  and  endure  semi-star- 
vation under  the  present  system.  Passengers  are  looked 
upon  as  simply  so  much  traffic,  and  all  the  charges  and 
extortions  are  heaped  upon  them  that  the  traffic  will 
bear.  The  railway  magnate  and  his  rich  kin  are  pro- 
vided with  luxurious  special  trains,  fully  equipped  with 
high-salaried  cooks,  waiters,  and  servants;  congi*essmen, 
State  legislators,  judges,  and  the  superlatively  rich  are 
furnished  free  passes.  Other  passengers  pay  the  enor- 
mous cost  of  all  that,  and  are  given  no  more  personal 
consideration  than  if  they  were  so  many  head  of  live 
stock.  Government  ownership  would  afford  relief  from 
these  intolerable  evils.  All  alike  would  be  required  to 
pay  the  reduced  charges,  according  to  the  kind  of 
service  demanded.  Comfort,  safety,  and  proper  food 
would  be  provided  at  proper  hours  and  at  reasonable 
prices. 

Those  familiar  with  the  crass  indifference  of  rail- 
road management  to  the  comfort  of  passengers  on 
Western  roads  had  reasoned  that  on  Eastern  roads  con- 
ditions must  be  better.  The  people  of  the  West  were 
therefore  unprepared  for  the  revelations  made  by  the 
Associated  Press,  during  the  winter  of  1904-5,  within 
the  immediate  vicinity  of  New  York  City.  Instances 
of  trainloads  of  passengers  "  snowed  in  "  on  Long  Isl- 

264 


DANGER  TO  EMPLOYEES  AND  PASSENGERS 

and  for  many  hours,  without  food  or  the  means  of 
producing  artificial  heat,  were  common.  Even  from  the 
New  York  Central,  the  main  artery  of  the  city's  inland 
commerce,  comes  a  story  of  the  intolerable  insolence  and 
indifference  of  private  control.  A  passenger  upon  a 
snow-stalled  train  related  the  following  story,  in  which 
he  was  fully  corroborated: 

"  At  four  o'clock  the  gas  went  out  in  all  the  cars, 
and  the  four  hundred  passengers  were  in  darkness. 
Then  the  babies  began  crying  and  everybody  was  mis- 
erable. Protests  were  in  vain.  The  babies  were  irre- 
pressible and  our  annoyances  were  complete.  Men  and 
women  clamored  for  coffee,  but  the  trainmen  would  not 
serve  it,  saying  the  dining  car  was  locked  and  would 
not  be  opened  until  seven  o'clock  in  the  morning.  We 
felt  that  our  sufferings  might  be  alleviated  as  much  as 
possible,  although  a  rule  of  the  railroad  might  be 
broken  to  do  so." 

Here  is  a  well-authenticated  report  of  even  a  more 
serious  abuse  on  a  Lackawanna  express  train: 

"  The  twenty  passengers,  every  one  of  them  men, 
passed  a  night  that  they  will  never  forget.  Four  of 
them  were  taken  to  Washington  exhausted,  and  are 
under  a  physician's  care.  It  was  only  through  the  aid 
of  some  men  who  lived  near  by  that  the  passengers  were 
able  to  leave  the  train  just  before  noon.  The  passen- 
gers say  they  came  near  freezing  to  death  and  had  to 
walk  the  aisles  all  night.  When  the  train  stalled,  they 
say  the  steam  from  the  locomotive  was  shut  off,  and 
the  snow  drifted  into  the  cars  until  it  was  six  inches 
deep  on  the  seats.  Some  of  the  passengers  tried  to  get 
into  the  baggage  and  mail  cars,  but  found  them  locked. 
Peering  through  the  windows,  they  observed  that  the 
conductor  and  his  crew  were  inside  a  car  that  was  com- 
fortably heated." 

If  the  electors  of  the  nation  could  only  travel  enough 
265 


BOSSISM   AND   MONOPOLY 

by  rail,  a  vast  majority  would  soon  become  advocates 
of  government  ownership,  "  or  anything  for  a  change." 
It  is  only  occasionally,  in  cases  of  sensational  inter- 
est, that  the  public  learn  anything  about  these  abuses 
through  the  press. 


266 


CHAPTER    XIII 

EVILS  or,  AND  ABUSES  BY,  RAILROADS  IN  PRIVATE  HANDS 

AS     SOURCE    OF     SOCIAL    DISORDER     AND     NATIONAL 

DANGER 

There  have  been  several  strikes  by  railway  em- 
ployees, within  the  memory  of  the  present  generation, 
characterized  by  violence,  bloodshed,  suspension  of  travel 
and  traffic,  and  paralysis  of  business  over  areas  more 
or  less  extensive.  The  alarming  feature  of  these  dis- 
turbances is  the  increasing  violence  and  magnitude  of 
each  succeeding  strike.  The  Pittsburg  strike  in  1878 
resulted  in  the  supremacy  of  mob  law  along  one  or  two 
lines  and  the  destruction  of  several  lives  and  perhaps 
a  million  dollars  in  value  of  property.  The  Burlington 
strike  in  1882,  while  not  involving  so  many  or  such 
serious  casualties  to  life  and  property,  was  more  stub- 
bom  and  protracted  and  extended  over  a  much  wider 
area.  The  great  strike  of  1894  developed  a  compre- 
hensive and  perfected  organization  among  railway  em- 
ployees coextensive  with  the  entire  country.  It  was 
what  is  known  as  a  sympathetic  strike,  and  will  go  down 
in  history  as  the  Pullman  strike.  The  country  has  been 
free  from  extensive  railway  strikes  for  several  years; 
but  causes  that  led  to  former  strikes  may  produce 
others,  and  new  causes  may  arise.  The  prominent  facts 
developed  by  the  great  strike  of  1894  teach  much  that 
should  be  turned  to  profitable  account  by  the  people. 
But  the  central  truth  evolved  from  the  whole  affair  is 
the  utter  inadequacy  of  law,  and  of  tho  judicial  ma- 

267 


BOSS  ISM    AND    MONOPOLY 

chinery  by  which  it  is  administered,  to  attain  the  ends 
of  abstract  justice.  The  law  sanctioned  the  cutting 
down  of  wages  by  the  Pullman  Company  to,  or  even 
below,  the  starvation  point  and  the  closing  of  the  works, 
even  if  the  employees  died  by  the  wayside.  The  law 
allowed  the  Pullman  Company,  while  cutting  down  the 
wages,  to  get  fresh  subjects  upon  whom  to  practice  the 
exhausting  process,  meanwhile  to  extract  from  the  life- 
blood  of  these  people  twenty-four  per  cent  profits  on 
capital  created  by  the  labor  of  others  whose  flesh  and 
blood  they  devoured  at  a  former  period  of  their  highly 
successful  and  therefore  very  "  respectable "  business 
career.  And  Mr.  George  M.  Pullman,  having  thus 
proved  himself  a  law-abiding  citizen,  and  by  donating 
$100,000  having  established  himself  as  a  philanthro- 
pist, expected  to  stand  in  the  eyes  of  man  and  God 
without  reproach.  A  thousand  millionaires  are  the  re- 
cipients of  large  revenues  in  the  form  of  interest  and 
dividends  on  fictitious  capital,  and  these  revenues  are 
extorted  from  the  sweat  and  toil  of  all  the  other  people 
of  the  country.  To  continue  and  insure  the  rich  streams 
of  gold  which  swell  their  coffers,  wages  are  reduced  and 
an  already  tax-ridden  people  are  compelled  to  pay  fares 
and  freights  to  the  full  extent  that  the  traffic  will  bear 
— and  the  law  allows  it!  When  an  association  of  work- 
ingmen  cut  out  Pullman  cars,  "  kill  "  engines,  and  force 
men  who  have  taken  their  places  to  quit,  armies  are 
mobilized  and  the  military  and  police  forces  of  the 
country  are  put  on  a  war  footing,  because  the  law  won't 
allow  it.  When  a  score  or  more  of  multimillionaires 
assemble  and  form  a  trunk-line  combination,  the  object 
and  effect  of  which  is  to  increase  and  maintain  rates 
equivalent  to  unjust  profits  on  railroad  capital,  they  are 
spoken  of  in  the  press  as  "  an  assemblage  of  gentle- 
men met  together  to  equalize  rates  and  secure  harmoni- 
ous management " ;  nor  is  any  law  found  to  fit  their 

^68 


NATIONAL   DANGER 

case.  To  cap  the  climax,  many  publicists  and  states- 
men have  failed  to  profit  by  the  experience  of  a  quarter 
of  a  century,  and  have  proposed  to  solve  the  railway 
question  by  statutory  declarations  and  penal  enactments. 
Every  writer,  including  Governor  La  Toilette,  the  most 
prominent  advocate  of  governmental  activity,  has  borne 
witness  to  the  haste  with  which  railroad  managers  pro- 
ceeded to  trample  under  foot  the  statutes  passed  by 
Congress  and  various  State  legislatures;  and  every 
statesman,  including  Senator  John  Sherman,  the  au- 
thor of  the  Anti-Trust  law  of  1890  (which,  however, 
was  emasculated  in  committee  after  it  left  his  hands), 
has  seen  the  folly  of  attempting  to  regulate  by  munici- 
pal laws  a  power  which  has  grown  faster  and  stronger 
than  the  people  of  the  United  States.  There  are  forces 
at  work,  social  and  economic,  which  no  statute  can  con- 
trol or  direct,  evil  forces  and  calamitous  tendencies  in- 
herent in  the  system  of  private  ownership,  which,  instead 
of  being  eradicated  by  law,  will  under  that  system,  if 
perpetuated,  still  further  aggrandize  and  centralize  cap- 
ital and  degrade  labor,  in  spite  of  or  by  perversion 
of  law.  No  better  evidence  of  the  misinformation  in 
high  places  on  this  subject  could  be  cited  than  the  fact 
of  the  introduction  of  a  bill  in  the  United  States  Senate 
on  July  10,  1894,  by  Senator  Sherman,  making  it  trea- 
son to  belong  to  a  labor  union,  and  the  fact  of  member- 
ship prima  facie  evidence  of  guilt.  It  is  true  that  the 
bill  offered  consolation  to  the  labor  unionist  for  the  loss 
of  his  only  weapon  against  the  greed  and  rapacity  of 
the  capitalists,  a  section  making  it  likewise  criminal  for 
capitalists  to  combine  against  labor;  but  if  the  vener- 
able statesman  had  been  able  to  penetrate  beneath  the 
surface,  he  would  have  seen  that  capital  has  always 
been  able  to  combine  and  perpetuate  its  combinations, 
law  or  no  law,  and  that  labor,  owing  to  the  very  weak- 
ness of  its  numerical  greatness,  has  never  been  able  to 

269 


BOSSISM    AND    MONOPOLY 

combine  effectively  or  to  escape  the  penalties  of  law. 
The  railroad  employee,  no  less  than  any  other  divisions 
of  the  great  army  of  labor,  suffers  on  account  of  exist- 
ing inequality  of  conditions.  Many  of  the  hardships 
and  much  of  the  oppression  to  which  the  railroad  em- 
ployees are  subjected  are  directly  traceable  to  the  efforts 
of  the  managers  to  squeeze  out  of  the  business  inequi- 
table dividends  and  a  high  rate  of  interest  on  inflated 
capitalization.  In  the  unequal  contest  for  justice,  in- 
dividual protest  counts  for  nothing,  nor  is  organization 
often  successful. 

Organized  capital  when  idle  needs  no  clothing  or 
fuel;  but  if  the  laborer  persists  in  insisting  upon  his 
rights,  the  hunger  and  nakedness  of  those  near  and  dear 
to  him  force  him  to  either  surrender  unconditionally  or 
to  compromise  for  a  fraction  of  his  just  dues. 

Could  the  treatment  of  the  employees  of  public  util- 
ity corporations  be  worse  than  at  present?  Here  is  a 
true  statement  of  the  condition  of  the  motormen  em- 
ployed on  the  Metropolitan  (street)  Railway  system  of 
New  York  during  the  dreadful  winter  of  1904—5 :  Many 
cases  of  pneumonia  and  frozen  faces  and  limbs  among 
motormen  resulted  from  the  blizzards.  Passengers,  who 
received  blasts  of  icy  air  when  the  front  door  of  a  car 
was  opened  to  let  people  in  or  out,  were  able  to  fully 
realize  just  what  the  motormen  were  enduring.  The 
motormen  dared  not  complain  for  fear  of  losing  their 
positions,  and  the  company  did  not  apparently  care  how 
much  the  men  suffered,  and  refused  to  stand  the  expense 
of  vestibuling  the  car  fronts. 

Private  ownership  of  these  great  public  agencies, 
such  as  the  railroad  and  the  telegraph,  are,  in  private 
hands,  as  much  a  menace  to  peace  and  good  government 
as  was  slavery. 


270 


CHAPTER    XIV 

REMEDIES   AND   PROPOSED    REMEDIES FUTILITY   OF 

ATTEMPTS    AT    RATE    REGULATION 

Excitement  soon  dies  out,  while  monopoly  lives  on. 
The  extortions  of  railroad  monopoly  have  been  so  rank 
of  late  as  to  stir  up  some  of  the  people  who  were  the 
M'orst  hurt.  To  allay  the  present  excitement  there  is 
much  talk  among  Cabinet  officers  and  in  Congress  about 
rate  legislation,  and  some  bill  may  be  passed — some  bill 
that  accomplishes  no  more  than  did  the  Sherman  Anti- 
Trust  bill  or  the  present  Interstate  Commerce  act. 

This  rate-law  agitation  is  one  of  the  greatest  farces 
ever  placed  upon  the  political  stage.  This  refers  to 
the  measure  so  nicely  adapted  to  forestall  government 
ownership  of  railroads  by  a  pretense  of  rate  regulation. 
Regulation  is  one  of  the  political  ointments  for  a  deep- 
rooted  sore.  ]Mere  statutes  attempting  to  hinder  the  rail- 
roads from  taking  all  the  traffic  will  bear  and  from 
making  discriminations,  will  be  mere  makeshifts  and  de- 
ceptions. They  will  be  ignored,  and  any  of  their  pro- 
visions which  stand  in  the  way  of  existing  abuses  will  be 
openly  violated  so  long  as  these  stupendous  aggregations 
of  financial  and  political  power  remain  in  private  hands. 
Some  of  the  politicians  and  editors  who  are  so  strenu- 
ously advocating  more  regulation  know,  and  some  do 
not  know,  the  utter  futility  of  such  attempts. 

The  more  effectually  to  allay  agitation  for  an 
effectual  remedy  the  railroad  presidents  hnve  conceded 
that  a  certain   degree  of  governmental  supervision   of 

271 


BOSSISM    AND    MONOPOLY 

rates  Is  admissible.  Having  made  such  concession,  it 
only  remains  for  them  to  so  direct  and  control  the  pro- 
ceedings in  the  Senate  that  any  measure  there  evolved, 
that  will  be  claimed  to  regulate  them,  is  harmless. 

The  great  railway  companies  whose  rates  it  is  pro- 
posed to  have  fixed  by  Congress,  extend  through  every 
State  and  Territory,  and  have  their  regular  agents,  as 
well  as  their  secret  political  and  professional  employees, 
in  almost  every  county.  Each  of  these  has  brought  to 
bear  upon  the  Senate  committee,  to  which  the  Townsend- 
Esch  bill  and  the  whole  subject  was  referred,  all  his 
influence  to  prevent  any  eff'ective  action  by  the  Senate. 
And  it  may  be  safely  assumed  that  the  committee  is 
predisposed  against  effective  rate  legislation,  and  will 
not  sanction  any  measure  which  will  afford  substantial 
relief.  How  did  the  committee  begin  the  investigation.'' 
Did  it  call  the  plaintiffs  into  court?  Did  it  call  any 
earnest  representatives  of  the  people  to  specify  abuses, 
to  show  discriminations,  rebates  to  favored  shippers,  and 
rates  so  high  as  to  strangle  particular  industries  and 
ruin  those  engaged  in  business  in  certain  localities,  and 
to  suggest  provisions  in  a  rate  bill  that  would  afford 
relief  in  such  cases?  No;  it  first  called  railroad  presi- 
dents and  their  counsel,  whose  influence  will  be  thrown 
against  any  measure  whatever,  unless  it  be  a  mere  make- 
shift that  can  be  used  for  campaign  purposes,  but  which 
will  not  stand  in  the  way  of  a  continuance  of  all  present 
abuses.  With  such  a  Senate  and  with  such  party  en- 
vironments it  is  absurd  to  suppose  that  President  Roose- 
velt will  be  able  to  carry  out  his  high-sounding  resolu- 
tions on  the  subject  of  rate  legislation. 

By  the  making  of  this  criticism  the  writer  does  not 
concede  that  the  interests  of  the  people  would  be  served 
by  the  enactment  of  any  rate-fixing  bill  whatever  at 
this  time.  On  the  contrary,  he  insists  that  such  a  bill 
would  be  a  delusion  and  merely  work  a  postponement 

272 


FUTILITY    OF    RATE    BILLS 

of  the  needed  measure  of  relief.     The  reasons  for  this 
view  it  is  proposed  to  fully  state. 

There  is  a  widespread  popular  delusion  on  the  sub- 
ject, and  the  people  should  be  undeceived  just  as  soon 
as  possible.  It  has  been  stated,  and  repeated  over  and 
over  again,  that  what  is  needed  is  more  power  in  the 
hands  of  the  Interstate  Commerce  Commission,  whereas, 
in  fact,  that  body  now  has  about  all  the  power  that 
Congress  and  the  President  can  constitutionally  confer. 
It  is  not  from  lack  of  any  statutory  power  to  regulate 
rates  that  the  uselessness  of  the  commission  and  its  fail- 
ure to  give  relief  from  abuses  results,  but  from  the  fact 
that,  by  concerted  action,  the  railroads  defy  and  dis- 
regard its  rulings  and  thwart  its  every  effort  to  secure 
justice  in  cost  of  transportation  and  to  prevent  rebates 
and  discriminations.  If  all  the  offenses  defined  in  the 
existing  Interstate  Commerce  law  which  have  been  com- 
mitted by  railroad  officers  and  managers  had  been  pun- 
ished by  fines,  a  considerable  addition  would  have  been 
made  to  the  public  revenues ;  and  if  by  imprisonment, 
the  jails  and  States'  prisons  of  the  country  would  have 
been  crowded  with  that  class  of  criminals  exclusively. 
It  is  the  same  old  story  of  making  a  thing  criminal 
which  has  been  for  a  long  period  a  daily  practice  by  a 
large  class  of  persons.  The  more  laws  that  are  passed 
for  the  repression  of  abuses  in  railroad  business,  the 
more  stupendous  and  hopeless  the  task  of  enforcing 
them.  Despite  the  present  Interstate  Commerce  act, 
passed  in  1887,  and  despite  the  creation  of  the  present 
commission,  specially  charged  with  the  duty  of  enfor- 
cing its  provisions,  it  is  universally  conceded  that  rail- 
way management  is  more  tyrannical  and  oppressive 
than  ever  before.  It  is  a  suggestion  of  only  ordinary 
prudence  and  pertinency  to  congressmen  and  senators 
that  they  ascertain  what  laws  are  at  present  in  force, 
and  what  have  been  the  experiences  of  the  commission 

273 


BOSSISM    AND    MONOPOLY 

in  attempts  to  enforce  them,  before  voting  for  any 
more  mere  regulating  statutes  or  creating  any  more 
commissions. 

The  true  policy  is  to  let  the  sore  continue  to  run 
until  Uncle  Sam,  the  surgeon,  applies  the  knife  of  gov- 
ernment ownership.  The  Interstate  Commerce  Commis- 
sion has,  in  every  report  thus  far  made,  referred  to  the 
facility  with  which  perjured  testimony  is  procurable  to 
rebut  any  allegation  made  before  the  commission  in 
investigations  before  it,  and  the  insolence  and  impunity 
with  which  railroad  officials  and  managers  refuse  to  give 
incriminating  testimony,  without  which  the  commission 
is  powerless.  How  is  it  possible  for  this  difficulty  to 
be  overcome  by  extending  the  power  of  the  commission 
over  rates? 

The  letter  of  the '  laws  now  on  the  statute  books 
could  scarcely  be  improved  upon.  Their  nonenforce- 
ment  proves  statutory  regulation  already  a  failure.  Let 
us  see  what  these  laws  are.  The  Interstate  Commerce 
act,  as  it  has  been  amended,  prohibits  unreasonable  and 
unjustly  discriminatory  rates  of  every  kind.  It  is  not 
necessary  that  the  commission  should  wait  for  some  one 
to  lodge  a  complaint  with  it.  It  may  itself  originate 
complaints  against  any  person  or  company  whom  it  has 
reason  to  suspect  has  been  guilty  of  violating  the  law. 
Whenever  it  discovers,  or  its  attention  has  been  called 
to,  a  rate  appearing  to  be  unreasonable  or  unjustly  dis- 
criminatory, it  must  order  the  carrier  to  immediately 
desist  from  maintaining  and  collecting  that  rate.  In 
case  of  non-compliance  with  such  order,  the  commission 
or  any  interested  party  may  bring  suit  against  the  car- 
rier, and  the  proper  court  must  then  afford  a  speedy 
hearing,  and  decree  that  this  company  obey  the  mandate 
of  the  commission,  if  the  same  be  found  to  have  been 
proper  and  lawful.  Though  an  appeal  may  be  taken 
to  the  Supreme  Court   from   a  decree  of   the   Circuit 

274 


FUTILITY    OF    RATE    BILLS 

Court  in  such  a  case,  yet  the  order  of  the  commission 
goes  into  effect,  notwithstanding  such  appeah  But  the 
Circuit  Court  may,  notwithstanding  its  decree  sustain- 
ing the  action  of  the  commission,  order  the  suspension 
of  the  order  of  the  commission  if  the  justice  of  the  case 
seems  to  require  it.  If  the  taking  eJfFect  of  the  order 
be  suspended,  such  terms  may  be  imposed  upon  the  car- 
rier as  the  court  sees  fit ;  for  instance,  giving  of  bond 
or  otherwise.  By  an  amendment  known  as  the  Elkins 
act,  the  commission  may  obtain  an  injunction  in  the 
first  instance  without  formal  hearing,  and  thus  stay  the 
collection  of  any  unjustly  discriminatory  rate.  But 
although  the  feasibility  of  this  remedy  as  a  means  for 
preventing  unjust  discriminations  was  pointed  out  by 
the  Supreme  Court  in  1902,  the  commission  has  never 
availed  itself  of  it  in  a  single  instance.  Thus  it  will 
be  found  that,  so  far  as  statutory  law  is  concerned, 
there  is  no  abuse  by  any  railroad  that  cannot  be  speedily 
reached  and  corrected,  and  it  is  not  in  the  power  of  any 
carrier  to  defeat,  suspend,  or  delay  the  operation  of 
any  order  made  by  the  commission  by  appeal,  provided 
only  that  the  unreasonableness  or  illegality  of  the  rate 
against  which  the  order  is  directed  can  be  made  to 
appear  to  the  court.  Another  very  effective  legislative 
weapon  in  the  hands  of  the  commission,  which  has  been 
but  rarely  if  ever  employed,  is  that  of  awarding  dam- 
ages to  any  person  aggrieved  by  unlawful  rates  charged 
by  carriers.  Those  who  declaim  against  Congress  for 
its  failure  to  enact  more  effective  laws,  conferring  upon 
the  commission  additional  powers,  find  warrant  for  their 
assertions,  that  existing  statutes  are  ineffective,  in  the 
reports  of  the  commission  itself,  made  to  Congi-ess  from 
time  to  time,  wherein  the  true  cause  of  the  failure  of 
the  commission  to  afford  relief  is  not  fully  stated.  These 
misleading  reports  have  been  reiterated  and  enlarged 
upon  by  writers  in  magazines  and  newspapers,  by  cam- 

275 


BOSSISM    AND    MONOPOLY 

paign  orators  on  the  stump,  and  by  members  of  Con- 
gress, in  and  out  of  the  halls  of  legislation,  until  the 
impression  has  become  fixed  in  the  public  mind  that  all 
that  is  needed  is  more  laws.  The  true  cause  for  the 
breakdown  of  the  Interstate  Commerce  law  is  not  the  in- 
sufficiency of  its  provisions,  but  the  inability  of  the  com- 
mission to  enforce  them  against  such  powerful  interests 
as  the  railroad  oligarchy.  And  such  inability  will  con- 
tinue, no  matter  what  laws  are  passed,  so  long  as  that 
oligarchy  remains  in  possession  and  control  of  the  means 
of  transportation. 

There  are  just  as  stringent  prohibitions  and  just  as 
detailed  a  method  of  procedure  for  the  discovery,  pre- 
vention, and  punishment  of  discriminatory  agreements 
and  contrivances  in  the  present  Interstate  Commerce  act 
as  Congress  can  enact  by  exercising  its  utmost  ingenu- 
ity, aided  by  the  legal  acumen  of  the  best  lawyers. 
And  yet,  not  in  a  single  instance  that  can  be  cited,  in 
the  eighteen  years  since  that  act  was  placed  among  the 
laws  of  the  nation,  has  the  Standard  Oil  Company  been 
deprived  of  the  benefit  of  a  discriminatory  agreement. 
The  reason  is  that  such  agi'eements  are  secret — gentle- 
men's agreements — the  exact  terms  of  which  cannot  be 
ascertained  as  a  result  of  any  eff'orts  of  which  the  Inter- 
state Commerce  Commission  is  capable.  Such  agree- 
ments are  not  of  record — they  are  not  reduced  to  writ- 
ing. They  are  not  even  made  on  behalf  of  either  "  high 
contracting  party  "  by  a  recognized  official.  They  are 
made  by  counsel  or  by  secret  agents,  whose  names  are 
never  divulged,  even  if  known  to  the  chief  officer  of  the 
shipping  and  railroad  companies.  For  that  reason  in- 
vestigations have  thus  far  borne  no  fruit,  and  will  bear 
none  in  the  future,  no  matter  what  additional  laws  are 
enacted. 

Neither  the  lawyers,  managers,  nor  witnesses  for  the 
railroads  have  ever  made  any  pretense  of  treating  the 

276 


FUTILITY    OF    BATE    BILLS 

commission  with  anything  more  than  the  mere  semblance 
of  outward  respect.  Witnesses  have  in  many  instances 
insolently  refused  to  answer  embarrassing  questions,  and 
lawyers  for  the  companies  have  as  often  threatened  that 
if  the  companies  they  represented  did  not  like  any  orders 
made  by  the  commission,  such  orders  would  be  disre- 
garded.    These  threats  have  usually  been  carried  out. 

If  a  palliative,  in  the  form  of  a  rate-fixing  bill,  be 
passed,  it  will  take  fifteen  years  for  the  people  to  learn 
its  inefficiency  through  the  courts.  Meantime  the  rail- 
roads and  trusts  will  have  the  works.  Can  the  people 
be  fooled  again?  Or  will  they  demand  such  genuine 
relief  as  only  government  ownership  will  afford? 

In  Minnesota,  Iowa,  Illinois,  Wisconsin,  California, 
and  a  few  other  States,  efforts  to  relieve  the  people  from 
extortions  and  discriminations  of  railroad  monopoly 
through  boards  of  railroad  commissioners  have  been 
made ;  but  "  failure  "  is  the  proper  word  to  write  at 
the  end  of  every  chapter  of  such  legislation. 

There  is  no  doubt  but  that  the  corrupting  influence 
of  the  corporation  is  to  some  extent  responsible  for  the 
failure  of  State  control  through  boards  of  railroad  com- 
missioners; but  that  the  incapacity  of  those  selected 
from  other  avocations  to  grapple  with  the  problems  sub- 
mitted to  them  had  a  great  deal  to  do  with  such  failures 
is  also  evident.  Governor  La  Follette,  an  ardent  advo- 
cate of  both  State  and  Federal  rate-making,  submitted 
certain  views,  in  a  series  of  articles  In  the  Saturday 
Evening  Post,  which  obviate  any  further  argument  on 
this  point.  While  he  urges  more  direct  State  control 
of  infrastate  commerce,  he  fails  to  state  any  successful 
attempts  at  State  regulation  of  rates  in  Wisconsin. 

If  this  can  be  truly  said  in  a  State  like  Wisconsin, 
where  three  principal  companies  do  nearly  all  the  busi- 
ness, consisting — on  one  side,  at  least- — of  but  a  limited 
range  of  production,  how  can  we  expect  a  mere  commis- 

277 


BOSSISM    AND    MONOPOLY 

sion  to  evolve  men  of  sufficient  capacity  to  fix  rates  for 
hundreds  of  railways,  for  the  transportation  of  thou- 
sands of  kinds  of  property,  between  States  sometimes 
widely  separated,  and  subject  to  intricate  and  rapidly 
changing  conditions? 

That  State  regulation  of  that  comparatively  small 
part  of  railway  traffic  carried  on  within  the  States  has 
been  little  better  than  a  farce  where  attempted,  is  easily 
demonstrable  from  the  facts  of  current  history.  But  as 
the  subject  of  this  work  is  broader  in  scope  than  any 
local  experiment,  we  do  not  consider  it  necessary  to  dis- 
cuss the  experiments  of  State  regulation. 

Governor  La  Follette,  President  Roosevelt,  and  other 
advocates  of  rate  legislation  ought  to  realize  that  to 
undertake  the  control  of  the  railroads  by  such  halfway 
measures,  leaving  the  business,  the  fiscal  management, 
and  the  properties  entirely  in  the  hands  of  present  pri- 
vate owners,  will  only  end  in  failure.  If  the  lesson  from 
futile  attempts  of  State  governments  are  not  sufficient 
to  teach  them  its  futility,  they  need  only  to  turn  to  the 
congressional  records  and  to  the  record  of  the  Interstate 
Commerce  Commission  to  be  convinced.  The  dominat- 
ing influence  of  railway  and  other  great  corporate 
interests  in  national  affairs  is  there  shown  in  history 
covering  the  last  eighteen  years.  Look  at  the  Interstate 
Commerce  act  and  record  of  the  Interstate  Commerce 
Commission  under  it,  and  then  answer  the  following 
questions  propounded  by  the  learned  governor,  who 
leaves  the  answers  to  them  to  implication :  "  Which  has 
had  the  stronger  hold  upon  State  and  national  legisla- 
tion during  the  last  twenty  years,  the  corporations  or  the 
people.'*  Whose  interests  have  been  the  more  safely 
guarded?  Where  is  the  power  lodged  which  has  for 
seven  years  been  strong  enough  to  bar  national  legisla- 
tion designed  to  enlarge  the  powers  of  the  Interstate 
Commerce  Commission  ?  "      Anyone  of  moderate  inf or- 

278 


FUTILITY    OF    RATE    BILLS 

mation  can  answer  the  last  question.  It  is  lodged  in 
that  body  designated  in  the  Constitution  and  laws  as 
the  United  States  Senate.  And  it  is  folly  to  expect  any 
relief  from  that  quarter,  either  in  the  form  of  a  rate 
bill  or  otherwise,  even  if  such  legislation  were  practicable 
and  adequate. 

Thence  Governor  La  Toilette  proceeds  to  a  vivid 
and  elaborate  portrayal  of  the  necessity  for  relief  from 
present  conditions  as  a  basis  for  a  remedy.  The  remedy 
which  his  arguments  and  facts  justify  is  not  rate  laws, 
which  he  suggests,  but  government  ownership.  He  says : 
"  In  the  long  struggle  to  secure  some  legislation  the 
friends  of  the  measure  have  been  content  to  ask  little, 
and  they  have  received  nothing.  But  through  all  the 
years  of  waiting  and  disappointment,  of  ruin  to  indi- 
viduals, and  demoralization  to  the  business  of  many  com- 
munities, public  sentiment  has  been  gathering  force.  It 
is  all-powerful  when  once  aroused.  Unless  I  mistake  the 
temper  of  the  American  people,  they  will  not  halt  or 
stop  or  compromise  until  that  demand  is  fully  satisfied." 
Yes,  and  that  full  measure  is  not  such  a  "  rate  bill  "  as 
John  D.  Rockefeller,  E.  H.  Harriman,  A.  J.  Cassatt, 
and  the  Vanderbilts  will  consent  that  the  Senate  shall 
approve,  and  Governor  La  Follette  appears  to  be  fully 
aware  of  it.  But  he  is  not  yet  willing  to  break  entirely 
with  the  reactionary  influences  that  surround  him. 
Thus  we  see  the  evil  that  has  always  resulted  from  fol- 
lowing the  teachings  and  advice  of  ambitious  party 
leaders  in  matters  affecting  the  purely  economic  prob- 
lems of  national  life. 

The  pressure  which  the  Wall  Street  financiers,  left 
to  own  the  railroads,  can  bring  to  bear  upon  any  tri- 
bunal which  Congress  can  create,  for  the  purpose  of 
even  revising  or  correcting  rates,  will  be  irresistible  in 
the  future  as  in  the  past.  Where  a  member  of  such 
tribunal  is  not  the  selection  or  tool  of  a  political  boss — 
19  279 


BOSS  ISM    AND    MONOPOLY 

as  he  may  be — and  therefore  more  than  willing  to  secure 
the  favor  of  the  railroad  oligarchy  at  the  expense  of 
the  people,  still  he  will  have  his  weaknesses;  and  temp- 
tations assume  so  many  seductive  forms,  and  appeal  to 
a  man  in  public  position  so  strongly,  that  he  must  be 
almost  superhuman  to  stand  against  them.  No  man  is 
beyond  their  reach.  No  man  is  exempt  from  the  in- 
sidious poison,  innuendo,  and  menaces,  or  the  bold  strikes 
of  the  rattlesnakes  in  the  journalistic  profession,  ready, 
for  a  cheap  subsidy,  to  belittle  and  defame  an  upright 
public  officer.  Nor  can  he  always  rely  for  his  vindica- 
tion upon  the  discriminating  powers  or  love  of  justice 
and  fair  play  of  the  reading  public.  Many  an  honest 
man  has  been  proscribed,  persecuted,  and  maligned  by 
hell-hounds  of  the  public  press,  and  so  mortified  by  the 
effect  of  the  fabrications  on  the  minds  of  the  public 
as  to  almost  wish  that  he  had  been  born  without  prin- 
ciples, as  were  the  majority  of  his  highly  respected  and 
popularly  accredited  contemporaries.  Editorial  writers 
for  great  newspapers,  posing  as  liigh  exemplars  of  fear- 
less morality,  honesty,  and,  above  all,  conservatism,  take 
care  of  plutocracy's  exponents  in  cabinet  positions,  in 
the  Senate,  on  the  bench,  and  especially  of  those  on 
railroad  commissions.  These  are  awarded  ample  space 
to  keep  their  names  and  personalities  before  the  public. 
Their  comings  and  goings  are  noted,  and  they  are  per- 
mitted to  write  for  publication  such  intei'%dews  with 
themselves  as  will  make  the  public,  whom  they  have  be- 
trayed and  sold  out,  believe  that  they  are  incarnations 
of  virtue  and  entitled  to  promotion.  And  the  more 
subservient  and  useful  a  man  makes  himself  to  the 
favored  interests,  the  more  will  they  and  their  organs 
do  for  him.  The  creation  of  another  commission  to  con- 
trol the  railroads  is  only  to  furnish  a  few  more  soft 
berths  to  be  filled  by  the  tools  of  the  party  bosses  and 
Standard  Oil  syndicates,  or  by  those  who  will  at  once, 

280 


1 


FUTILITY    OF    RATE    BILLS 

willingly  or  unwillingly,  fall  under  their  influence  and 
power.  The  remedy  is  government  ownership,  in  the 
administration  of  which  we  are  rid  of  the  railroad  mo- 
nopoly, the  retainer  of  the  national  and  local  party 
bosses. 

Railroads  and  other  public-service  corporations  have 
monopolies  acquired  by  utilizing  governmental  powers 
of  eminent  domain  and  franchises  specially  granted  to 
and  conferred  upon  them.  Upon  the  basic  monopolies 
thus  acquired  they  have  acquired  others,  by  reason  of 
the  location  of  their  properties,  by  combinations  with 
others  similarly  favored,  and  by  municipal  ordinances 
granting  exclusive  use  of  streets,  terminal  privileges, 
and  exclusive  rights  to  collect  tolls,  rates,  fares,  and 
freights.  They  usually  enjoy  a  combination  of  special 
privileges,  some  granted  by  law  and  others  acquired  by 
the  exercise  of  those  granted  by  statutes  and  ordi- 
nances. And  so,  governments  having,  sometimes  by  spe- 
cial and  at  other  times  by  general  laws,  conferred  the 
power  on  persons  to  create  monopolies,  all  anti-monopoly 
legislation  which  falls  short  of  taking  it  away  is  futile; 
because  governments,  having  themselves  previously  ap- 
pealed to  the  self-interest  of  men  and  encouraged  and 
aided  them  to  improve  the  opportunities  which  govern- 
ments have  provided,  and  having  become  responsible  for 
transportation  monopoly,  without  which  competition, 
which  would  be  a  protection  is  eliminated,  cannot  hope 
to  get  rid  of  these  abuses  otherwise  than  by  a  with- 
drawal of  monopoly  privileges  they  have  conferred,  and 
thenceforth  exercising  them  for  the  equal  benefit  of  all 
the  people. 

The  utter  futility  of  enacting  more  penal  statutes, 
and  passing  them  up  to  the  courts  for  enforcement, 
is  demonstrated  in  the  few  instances  where  the  Sherman 
Anti-Trust  law  was  found  to  have  been  violated.  A 
clause  in  that  act  provides  as  follows :  "  Every  person 

281 


BOSSISM    AND    MONOPOLY 

who  shall  make  any  such  contract  (restrictive  of  inter- 
state commerce),  or  engage  in  any  such  combination  or 
conspiracy  (in  restraint  of  trade),  shall  be  deemed 
guilty  of  a  misdemeanor,  and  on  conviction  thereof  shall 
be  punished  by  fine,  not  exceeding  Five  Thousand  Dol- 
lars, or  by  imprisonment  not  exceeding  one  year,  or  by 
both  said  punishments,  in  the  discretion  of  the  courts." 
Several  gentlemen,  easy  to  find,  entered  openly  into  the 
Northern  Securities  combination.  But  no  attempt  has 
been  made,  so  far  as  known,  by  any  law  officer  to  enforce 
the  provision  above  quoted  against  anyone  entering  into 
that  combination.  What,  then,  will  be  the  penalties  by 
which  evasion  of  a  law  regulating  or  fixing  rates  are 
to  be  enforced?  If  any,  simply  the  fine,  of  course — 
which  is  never  collected ;  with  a  discretion  to  inflict  im- 
prisonment— which  is  never  invoked  by  the  law  officers 
of  the  Government,  and  which,  of  course,  is  never  exer- 
cised. We  read  in  the  newspapers  a  great  deal  about 
the  deep-laid  plans  of  the  Federal  law  department  for 
the  prosecution  and  punishment  of  corporations  for  the 
giving  of  rebates  and  other  violations  of  the  Interstate 
Commerce  act.  If  it  is  the  intention  to  take  effective 
criminal  action,  why  is  it  not  taken  against  the  officials, 
who  are  the  really  responsible  and  guilty  parties.?  One 
need  not  seek  far  for  the  reason.  If  an  individual  is 
found  guilty,  there  might  be  such  a  public  demand  for 
his  imprisonment,  rather  than  the  imposition  of  a  mere 
fine,  as  could  not  be  resisted ;  whereas  a  corporation  can- 
not be  imprisoned.  What  does  a  great  corporation, 
such  as  the  Atchison,  Topeka  &  Santa  Fe  Railway 
Company,  for  instance,  or  one  of  the  trusts  with  an 
annual  income  running  into  the  millions,  care  for  a  fine 
of  $5,000— that  being  the  limit.? 

Aside  from  the  foregoing  considerations,  the  idea  of 
punitive  regulation  of  railroads  and  other  monopolies  is 
one  which  has  led  many  people  far  astray.     After  penal 

282 


FUTILITY    OF    RATE    BILLS 

statutes  are  passed,  men  shrink  instinctively  from  im- 
posing heavy  fines  or  terms  of  imprisonment  for  doing 
that  which,  without  the  statute,  would  be  consistent  with 
accepted  ideals  of  business  morality. 

Each  transportation  service  is  based  upon  a  contract, 
express  or  implied,  usually  in  writing.  First,  there  is 
the  published  freight  schedule  (sometimes  called  sheet), 
which  is  neither  more  nor  less  than,  nor  anything  dif- 
ferent from,  a  standing  offer  to  perform  a  service  for 
whoever  has  freight  to  haul.  Whoever  delivers  freight 
to  be  carried  accepts  the  terms  so  offered.  A  contract, 
partly  written  and  partly  printed — but  what  the  law 
terms  a  written  contract,  popularly  called  a  bill  of  lad- 
ing— is  then  made  out  and  delivered.  Now  the  char- 
acter and  relation  of  the  carrier  as  a  party  to  such 
contract  must  be  distinguished  from  its  character  and 
relation  while  performing  it.  Notwithstanding  the  po- 
sition of  advantage  the  carrier  holds  over  the  shipper, 
it  nevertheless  contracts  simply  in  its  capacity  as  a  pri- 
vate party,  and  while  its  privilege  to  so  contract  may 
be  regulated  by  the  sovereign  so  as  to  forbid  the  exac- 
tion of  an  exorbitant  rate,  yet  the  sovereign,  under  such 
limitations  as  are  contained  in  our  Constitution,  cannot 
entirely  abrogate  or  destroy  this  right  of  contract. 
But  under  the  power  of  Congress  "  to  regulate  com- 
merce with  foreign  nations,  and  among  the  several 
States  and  with  the  Indian  tribes,"  it  is  settled  beyond 
the  prospect  of  a  change,  in  its  ruling  by  the  Supreme 
Court  of  the  United  States,  that  Congress  may  fix  rates 
for  transportation  by  rail,  or  it  may  declare  general 
rules  to  govern  rates  and  provide  for  their  adjustment 
by  a  commission.  Congress  has  as  full  and  adequate 
powers  herein  with  respect  to  interstate  commerce  as 
the  States  have  with  respect  to  infrastrate  commerce,  the 
only  limitations  upon  the  power  being  those  found  in 
provisions    of    the    Federal    Constitution,    in    the    case 

283 


BOSSISM    AND    MONOPOLY 

of  Congress,  and  in  the  Federal  Constitution  and  State 
constitutions,  in  cases  of  State  legislation. 

The  phases  of  the  subject  were  clearly  stated  by 
Hon.  W.  S.  Moody,  Attorney  General,  in  an  officially 
communicated  message  to  the  Senate  committee: 

"  First.  There  is  a  governmental  power  to  fix  the 
maximum  future  charges  of  carriers  by  railroad,  vested 
in  the  Legislatures  of  the  States  with  regard  to  trans- 
portation exclusively  within  the  States,  and  vested  in 
Congress  with  regard  to  all  other  transportation.  Sec- 
ond. Although  legislative  power,  properly  speaking, 
cannot  be  delegated,  the  lawmaking  body,  having  en- 
acted into  law  the  standard  of  charges  which  shall  con- 
trol, may  intrust  to  an  administrative  body,  not  exer- 
cising in  the  true  sense  judicial  power,  the  duty  to  fix 
rates  in  conformity  with  that  standard.  Third.  The 
rate-making  power  is  not  a  judicial  function  and  cannot 
be  conferred  constitutionally  upon  the  courts  of  the 
United  States,  either  by  way  of  original  or  appellate 
jurisdiction.  Fourth.  The  courts,  however,  have  the 
power  to  investigate  any  rate  or  rates  fixed  by  legisla- 
tive authority  and  to  determine  whether  they  are  such 
as  would  be  confiscatory  of  the  property  of  the  carrier, 
and,  if  they  are  judicially  found  to  be  confiscatory  in 
their  effect,  to  restrain  their  enforcement.  Fifth.  Any 
law  which  attempts  to  deprive  the  courts  of  this  power 
is  unconstitutional." 

This  opinion  is  founded,  in  respect  to  every  point,  on 
clear  and  specific  rulings  of  the  Supreme  Court  directly 
affirming  that  very  point.  No  better  illustration  of  the 
authority  on  which  this  opinion  rests  could  be  asked 
than  the  very  decision  which  denied  to  the  Interstate 
Commerce  Commission  the  power  to  prescribe  the  just 
rate  to  take  the  place  of  one  found  to  be  unjust.  The 
court  held  that  Congress  had  the  right  to  grant  this 
power  to  the  commission.     But  such  a  grant  must  be 

284 


FUTILITY    OF    RATE    BILLS 

made  directly  and  by  specific  language,  which,  the  court 
held,  was  not  done  in  the  act  of  1887. 

The  proposition  of  the  administration,  as  modified 
since  its  first  announcement,  is  that  a  commission  shall 
be  empowered  to  pass  upon  complaints  that  specified 
rates  are  unreasonable,  and  if  a  complaint  be  well 
founded,  may,  after  so  finding,  declare  the  maximum 
rate  which  the  company  may  charge  and  collect.  It  is 
clear  that  in  every  instance  where  a  road  has  fixed  a  rate 
which  has  given  rise  to  a  complaint,  and  the  question 
of  its  reasonableness  has  been  litigated  before  the  com- 
mission, the  company  will  not  then  fix  a  rate  lower 
than  the  maximum  declared  by  the  commission.  The 
fact  that  it  has  stood  its  ground  and  litigated  its  claim 
of  right  to  charge  a  rate  still  higher  than  the  maxi- 
mum rate  thus  declared,  would  preclude  the  idea  that 
a  still  lower  rate  would  be  acceptable,  until  there  was 
a  considerable  change  in  conditions.  So  that  the  power 
which  is  now  sought  to  be  conferred  upon  a  commission 
is,  in  substance  and  effect,  the  power  to  fix  or  establish 
rates,  in  all  cases  where  it  acquires  jurisdiction,  by  the 
presentation  before  it  of  a  complaint.  Since  the  Su- 
preme Court  has  positively  and  unequivocally  upheld 
the  power  conferred  upon  the  Interstate  Commerce  Com- 
mission to  prohibit  the  collection  of  a  rate  unreasonably^ 
high,  the  question  of  the  powers  of  Congress,  and  of 
such  commissions  respectively,  cannot  be  considered  as 
one  that  is  open  to  debate.  But  looking  squarely  at 
the  true  substance  and  effect  of  things  practical,  as 
well  as  theoretical,  there  is  not  the  slightest  difference 
between  the  present  powers  of  the  commission,  if  exer- 
cised in  a  roundabout  way,  and  the  power  to  be  conferred 
by  statute,  to  be  exercised  immediately  and  directly. 
For  instance,  Jones  now  comes  before  the  commission 
and  objects  to  the  present  rate  on  potatoes  of  fifty  cents 
per  hundred  from  Denver  to  Chicago,  and,  after  hear- 

285 


BOSSISM    AND    MONOPOLY 

ing  the  carrier,  it  decides  that  the  rate  is  unreasonable. 
The  carrier  then  fixes  the  rate  at  forty-five,  then  forty 
cents,  each  in  its  turn  being  complained  against  and 
declared  by  the  commission  to  be  unreasonable,  until  at 
length  a  rate  of  thirty-five  cents  is  reached  in  the  de- 
scending scale.  Then  the  commission  announces  that 
the  carrier  has  reached  a  rate  that  is  not  unreasonable, 
and  dismisses  the  complaint.  The  commission  has  as 
effectually  fixed,  or  declared  (if  the  latter  term  be  pre- 
ferred), a  maximum  rate,  as  if  it  had  fixed  it  at  the 
hearing  of  the  complaint  against  the  fifty-cent  rate, 
and  with  a  great  deal  less  labor,  expense,  and  annoyance 
to  itself  and  the  parties  to  the  litigation.  Nor  can  any 
legal  objection  be  found  to  the  commissioners  now  de- 
claring ex  cathedra  their  opinion  of  what  a  reasonable 
rate  in  a  given  case  would  be. 

Now,  going  a  short  step  further,  the  Supreme  Court, 
by  upholding  the  power  of  the  commission  to  declare  a 
rate  unreasonable,  has  recognized  its  power  to  fix  rates 
in  a  roundabout  way,  though  asserting  that,  to  enable 
it  to  do  so  directly,  other  and  more  specific  legislation  is 
required.  And,  upon  the  foregoing  reasoning,  a  bill 
framed,  as  is  the  Townsend-Esch  bill,  merely  trifles  with 
the  subject.  Much  better,  if  any  such  bill  be  seriously 
considered,  would  it  be  for  the  railroads  as  well  as  the 
public  to  directly,  and  in  the  fewest  words,  confer  upon 
the  commission  the  power  to  make  freight  schedules 
or  rates. 

But  elements  more  difficult  to  deal  with  than  any 
that  have  been  mentioned  enter  into  the  problem  of  fix- 
ing rates  through  and  by  commission  for  the  several 
hundred  privately  owned  interstate  roads  in  the  United 
States.  Among  the  matters  for  consideration  may  be 
mentioned  competitive  markets.  Whether  the  markets 
to  be  considered  in  determining  a  rate  for  a  particular 
road  upon  a  given  commodity  be  a  home  or  a  foreign 

286 


Jet 


FUTILITY    OF    RATE    BILLS 

market,  there  must,  in  a  large  percentage  of  cases,  be 
considered  also  the  ocean-carrying  trade,  with  many 
adjunctive  interests  and  closely  or  remotely  connected 
questions  of  foreign  trade.  For  instance,  the  foreign 
market  for  cotton  is  Liverpool.  Here  the  competition 
between  various  steamship  lines,  and  between  these  and 
tramp  sailing  vessels,  keep  the  ocean  rates  constantly 
fluctuating.  And  when  the  cotton  has  arrived  at  Liver- 
pool it  comes  in  competition  with  cotton  produced  in 
other  parts  of  the  world.  These  are  some  of  the  mat- 
ters that  must  be  investigated;  and  they  must  be  fre- 
quently looked  into  by  traffic  managers,  and  railroad 
rates  to  port  must  be  adjusted  from  time  to  time,  in 
order  that  great  loss  be  not  entailed  upon  shippers. 
Now  it  is  evident  that  an  attempt  by  a  commission  to 
fix  a  rate  upon  exportable  aiticles,  the  rate  to  have  the 
force  and  effect  of  law,  with  a  penalty  attached  for  its 
violation,  would  either  prove  abortive  or  would  generally 
work  the  most  serious  injury  to  shippers  as  well  as  rail- 
roads before  it  could  be  changed.  And  before  the  evi- 
dence could  be  laid  before  it  upon  which  a  change  was 
sought,  the  conditions  requiring  the  change  may  have 
disappeared,  or  new  conditions  may  have  arisen  render- 
ing the  rate  made  upon  the  facts  before  it  most  preju- 
dicial to  all  parties  in  interest. 

The  term  "  discrimination "  is  a  word  of  double 
meaning,  being  sometimes  used  in  an  abstract  and  at 
other  times  in  a  relative  sense.  In  the  former  sense 
it  is  the  duty  of  railroads  to  discriminate.  Traffic 
managers  must  discriminate  in  making  classifications  of 
freight,  which  is  the  basis  of  all  rate  sheets.  They  must 
discriminate  after  the  classification  is  made  with  refer- 
ence to  charges  for  the  different  classes;  and  this  in- 
volves the  exercise  of  judgment  as  to  the  volume  of  the 
traffic,  market  prices,  advantages  of  different  markets, 
development  of  new  territory,  probable  aggregates  of 

287 


BOSSISM    AND    MONOPOLY 

freight  under  other  heads  of  classification,  and  many 
other  matters,  most  of  which  are  subject  to  variations. 
In  reaching  an  ultimate  result,  in  which  each  of  these 
elements  must  be  given  its  due  effect,  the  keenest  dis- 
criminating powers  must  be  exercised  at  every  step. 
The  obnoxious  sense  of  the  term  has  reference,  among 
other  things,  to  deviations  from  an  established  rate, 
after  it  has  been  established,  in  dealing  with  individuals. 
Of  course  discrimination,  in  the  vicious  sense,  may  be 
practiced  in  making  a  classification.  For  instance,  po- 
tatoes are  placed  in  Class  4,  upon  which  the  rate  is 
fifty  cents  per  hundred,  and  apples  in  Class  5,  upon 
which,  the  rate  is  forty  cents  per  hundred,  and  potatoes 
and  apples  command  exactly  the  same  price  in  the  mar- 
kets, and  A  is  a  producer  of  potatoes,  while  B  is  a  pro- 
ducer of  apples.  The  actual  result  is  a  discrimination 
between  individuals.  But  market  prices  are  constantly 
fluctuating,  so  that  frequent  changes  of  classification 
are  proper,  and  if  not  made  promptly  whole  sections 
and  industries  may  be  seriously  injured.  Can  any  com- 
mission that  Congress  can  establish  give  proper  atten- 
tion to  the  innumerable  changes  occurring  from  day  to 
day  in  prices  of  hundreds  of  staple  articles  of  commerce 
involving  many  lines  of  railway?  It  is  important  to 
note  in  this  connection  that  nearly  every  bill  introduced 
provides  for  appeals,  stays,  and  other  delays. 

The  work  of  keeping  the  classification  and  rates 
properly  adjusted  upon  any  one  of  the  great  systems 
is  one  ever  calling  for  the  exercise  of  the  very  highest 
faculties  of  the  most  experienced  traffic  manager;  and 
even  then  serious  mistakes  and  inequalities  are  found  to 
have  occurred.  Under  government  ownership  the  same 
talented  and  experienced  managers  could  be  retained ; 
but  under  a  rate-fixing  commission  the  people  would  not 
stand  the  enormous  expense  of  an  arm.y  of  highly  sal- 
aried traffic  managers  working  for  the  railroads,  and 

288 


FUTILITY    OF    RATE    BILLS 

the  arrangement  would  be  far  from  satisfactory  to  the 
companies,  to  speak  with  extreme  moderation. 

But  we  have  not,  so  far,  fairly  made  a  beginning  of 
the  duties  and  responsibilities  which  must  be  assumed  by 
a  rate-fixing  commission. 

About  the  time  the  power  to  fix  rates  was  first 
claimed  for  the  commission.  Judge  Cooley,  probably  the 
ablest  lawyer  who  was  ever  a  member  of  the  commission, 
speaking  with  reference  to  the  difficulty  of  exercising 
such  a  power,  said :  "  In  a  country  so  large  as  ours,  with 
so  vast  a  mileage  of  roads,  it  would  be  superhuman.  A 
construction  of  the  law  which  would  require  the  per- 
formance would  render  the  due  administration  of  the 
law  altogether  impractical,  and  that  fact  tends  strongly 
to  show  that  such  a  construction  could  not  have  been 
intended."  If  the  Supreme  Court  had  not  settled  the 
question  in  favor  of  congressional  power  to  fix  rates,  it 
would  be  opportune  to  remark  that  perhaps  nothing 
would  have  been  further  from  the  intentions  of  the 
framers  of  the  Constitution — if  they  could  have  foreseen 
a  country  within  whose  boundaries  every  climate  was  to 
be  found,  with  the  resulting  variety  of  products,  trav- 
ersed by  200,000  miles  of  railway — than  an  attempt 
by  Congress,  under  the  Interstate  Commerce  clause,  to 
decide  and  adjust  the  prices  to  be  charged  for  trans- 
portation of  each  of  hundreds  of  articles  of  commerce. 
The  only  way  any  commission  could  administer  such  a 
power  would  be  through  the  cooperation  of  all  the  traffic 
managers  in  the  country,  whose  opinions  in  that  case 
must  of  necessity  control  the  commission,  so  that  prac- 
tically the  power  to  fix  rates  would  then  rest  where  it 
now  rests.  It  is  not  any  difficulty  in  construing  or  ap- 
plying the  present  Interstate  Commerce  act  that  makes 
its  enforcement  so  lax,  but  the  fact  that,  for  facts  upon 
which  to  make  decrees,  the  commissioners  are  always 
entirely  dependent  upon  information  obtained  from  rail- 

289 


BOSSISM    AND    MONOPOLY 

way  management,  which  presupposes  the  good  will  and 
good  offices  of  such  management  in  enforcing  the  laws 
against  themselves.  It  is  not  therefore  difficult  to  fore- 
see that,  even  if  Congi'ess  attempted  to  exercise  its  power 
to  fix  rates,  the  statute  must  be  a  dead  letter. 

The  rate  is  the  basis  of  almost  everything  that 
makes  railroad  business  worth  while.  It  is  the  parent 
of  wages ;  it  is  the  key  to  corporate  finance.  The  bond- 
holder looks  to  it  for  his  interest  and  for  maintenance 
of  the  sinking  fund;  the  stockholder  for  dividends. 
Such  a  commission  must  either  ignore  all  these  interests 
and  fix  rates  arbitrarily,  or  must  supervise,  at  least, 
the  most  complicated  financial  bureau  ever  known  since 
the  beginning  of  the  world,  having  a  separate  and  com- 
prehensive department  for  each  interstate  road  in  the 
United  States.  Government  ownership,  on  the  other 
hand,  would  wipe  out  all  these  separate  systems  of  rail- 
road financing  and  substitute  a  simple  plan,  comprising 
one  unified  system,  of  which  each  road  would  be  merely 
a  branch  line. 

The  absolute  power  to  fix  or  make  or  establish  rates 
signifies  no  greater  or  less  dominion  over  railroad  prop- 
erties than  that  incident  to  ownership.  That  is  almost 
self-evident.  The  only  difference  between  the  two  con- 
ditions is  that  in  the  one  case  the  tribunal  making  and 
enforcing  the  rate  does  it  for  private  owners,  and  in 
the  other  for  the  Government.  In  the  one  case  the 
profits  of  operating  the  roads,  if  any,  go  to  a  few  indi- 
viduals ;  in  the  other  they  go  to  the  community  at  large. 
Such  an  extent  of  control  as  is  contemplated  by  the  more 
radical  rate-fixers  is  ownership  minus  the  benefits  thereof. 

Most  of  the  difficult  problems  of  classification  and 
rates  would  disappear  under  government  ownership. 
With  all  roads  under  a  unified  control,  simplicity,  per- 
manency, and  uniformity  would  take  the  place  of  com- 
plexity,  fluctuation,   and   inequality.      It   would   be   an 

290 


FUTILITY    OF    RATE    BILLS 

easier  task  to  adjust  rates  for  the  whole  country  than 
for  any  one  of  the  great  interstate  systems  which  still 
compete  with  each  other,  at  least  with  reference  to 
volume  of  traffic.  No  qualified  railroad  manager  will 
venture  to  dispute  any  of  the  foregoing  propositions. 

The  adjustment  of  rates  is  by  far  the  most  impor- 
tant and  difficult  problem  of  railroad  management.  If 
the  Government  can  perform  that  function  of  ownership 
and  administration,  other  functions  offer  no  obstacles. 
No  question  of  business  quite  so  broad  and  intricate  ever 
addressed  itself  to  the  modern  business  mind  as  this  of 
fixing  rates  for  transportation. 

The  eleventh  annual  report  of  the  Interstate  Com- 
merce Commission  mentions  the  technical  knowledge  re- 
quired In  the  classification  of  commodities  and  the  mul- 
titude of  factors  which  must  be  considered.  From  a 
very  able  article  on  the  subject  by  Henry  C.  Nicholas, 
in  Public  Opinion  of  recent  date,  the  following  excerpt 
is  taken:  "  Briefly  stated,  the  officials  intrusted  with  the 
making  of  rates  have  to  take  into  account  whether  com- 
modities are  crude,  rough  or  finished,  liquid  or  dry, 
knocked  down  or  set  up,  loose  or  in  bulk,  nested  or  in 
boxes,  or  otherwise  packed ;  if  vegetables,  whether  gi'een 
or  dry,  desiccated  or  evaporated,  the  market  value  and 
shipper's  representation  as  to  their  character,  the  cost 
of  service,  length  and  direction  of  haul,  the  season  and 
manner  of  shipment,  the  space  occupied  and  weight, 
whether  in  carload  or  less  than  carload  lots,  the  volume 
of  annual  shipments  to  be  calculated  on,  the  sort  of  car 
required,  whether  flat,  gondola,  box,  tank,  or  special; 
whether  ice  or  heat  must  be  furnished,  the  speed  of  trains 
necessary  for  perishable  or  otherwise  rush  goods,  the 
risk  of  handling,  either  to  the  goods  themselves  or  other 
property ;  the  weights,  actual  and  estimated ;  the  car- 
rier's risk  or  owner's  release  from  damage  or  loss.  Even 
this  enumeration  does  not  begin  to  exhaust  the  numer- 

291 


BOSSISM    AND    MONOPOLY 

ous  factors  which  have  to  be  considered  in  the  classifica- 
tion of  freight.  The  cost  of  the  service  has  to  be  ascer- 
tained and  considered,  as  well  as  the  value  of  the  service 
rendered.  To  determine  this  latter  factor  alone  it  is 
necessary  that  the  traffic  experts  should  have  an  intimate 
knowledge  of  the  costs  of  production  of  the  various 
articles,  of  the  market  prices  at  different  points,  and 
the  nature  and  character  of  the  demand  for  the  com- 
modity— whether  the  article  is  a  necessity  or  a  luxury 
and  whether  or  not  some  other  commodity  can  be  readily 
substituted  for  it.  Traffic  experts  have  to  take  into 
consideration  whether  the  cars  which  will  carry  one  class 
of  freight  in  one  direction  will  secure  a  load  at  that 
point  or  will  have  to  be  hauled  back  empty.  Other 
factors,  such  as  water  competition,  the  competition  of 
markets,  the  desirability  of  developing  certain  industries 
along  the  lines  of  the  company,  also  have  to  be  consid- 
ered." But  there  is  a  fair  and  constitutional  way  of 
acquiring  the  power  asked  by  the  commission,  viz., 
acquire  title  to  the  properties  by  exercising  the  right 
of  eminent  domain.  Then  the  Government  can  as  easily 
hire  competent  railroad  talent  as  can  the  present  owners 
of  the  railroads. 


292 


CHAPTER    XV 

BEMEDIES    AND    PROPOSED    REMEDIES VIEWS    OF    OTHERS 

After  years  of  practices  amounting  practically  to 
robbery,  by  vast  monopolies  in  transportation  and  pro- 
duction, and  the  waste  of  barrels  of  printers'  ink  spread 
over  good  white  paper,  there  is  no  generally  accepted 
view  as  to  how  they  should  be  dealt  with.  Some  say 
let  them  alone,  some  say  exterminate,  others  regulate. 
These  divergencies  are  largely  due  to  ignorance  of  the 
real  source  of  the  power  of  individuals  to  obtain  such 
control  of  particular  lines  of  business  as  to  make  it 
unprofitable  or  impossible  for  others  to  engage  in  them. 
The  success  of  a  monopoly  created  by  mere  combination 
must  be,  in  the  nature  of  things,  short  lived.  A  deep 
study  of  the  subject  will  disclose  that  every  "  trust  " 
that  need  be  feared  has  succeeded  in  its  effort  to  mo- 
nopolize that  in  which  it  deals  by  reason  of  special 
favors  conferred  upon  it  by  law  or  by  its  having  ac- 
quired a  monopoly  of  the  raw  materials  of  manufacture 
by  purchase  or  by  favorable  legislation. 

For  the  manifold  and  intolerable  evils  of  the  present 
railroad  system  various  remedies  other  than  government 
ownership  have  been  proposed.  Several  able  writers 
have  grappled  with  the  railroad  problem,  each  propos- 
ing a  different  remedy.  But  none  of  the  proposed 
reforms  will,  in  the  opinion  of  the  writer,  reach  the 
necessities  of  the  case.  In  all  that  has  been  written  and 
spoken,  by  anyone  earnestly  committed  to  radical  reform, 
little,  if  anything,  has  been  stated  as  facts  which,  being 

293 


BOSSISM    AND    MONOPOLY 

accepted,  would  stand  in  the  way  of  government  owner- 
ship. Governor  Larabee,  in  "  The  Raih'oad  Question," 
and  Hon.  R.  M.  La  Follette,  of  Wisconsin,  in  a  series 
of  articles,  entitled  "  Rate  Regulation,"  advocate  in- 
creased governmental  activity  and  absolute  govern- 
mental control,  leaving  the  ownership  of  railways  in 
private  hands;  but  their  able  arguments  and  startling 
facts  justify  a  more  radical  remedy  than  either  pro- 
poses. Past  violations  and  evasions  of  statutory  regu- 
lations, pointed  out  by  them,  instead  of  justifying 
attempts  at  State  regulations,  appear  to  establish  in 
advance  the  utter  futility  of  depending  upon  legislative 
bodies  to  pass,  the  judiciary  to  uphold,  or  executives 
to  enforce  statutory  remedies.  The  domination  of  the 
railroad  corporations  in  politics  and  in  every  branch  of 
Government  is  recognized  by  them  throughout.  Is  it 
not  plain,  therefore,  that  State  regulation  means  for 
the  railroads  self-regulation,  and  that  this  suggests  no 
remedy,  but  rather  a  perpetuation  of  existing  abuses.'' 
Without  disparagement  of  others,  it  must  be  said  of  the 
former  chief  executive  of  Wisconsin  that  he  has  gone 
deeper  into  the  railroad  and  transportation  question, 
has  more  thoroughly  analyzed  the  needs  of  the  public, 
and  has  more  fully  catalogued  the  abuses  of  railroad 
corporations  than  any  writer  on  this  far-reacliing  and 
vastly  important  subject.  The  reforms  wliich  he  pro- 
poses, if  possible  of  accomplishment  by  legislation  di- 
rected against  the  corporations  as  independent  objects, 
would  of  course  dispense  with  the  necessity  of  govern- 
ment o^vnersllip  and  permanently  dispose  of  the  railroad 
problem  as  a  problem.  But  much  of  what  he  has  writ- 
ten consists  of  accounts  of  the  struggles  of  the  people 
in  an  organized  capacity  to  accomplish  a  few  of  these 
reforms,  and  of  their  utter  failure  in  nearly  every  phase. 
The  governmental  organs  through  which  he  proposes 
to  revolutionize  the  entire  transportation  business  of  the 

294 


VIEWS    OF    OTHERS 

nation  are  a  Federal  regulation  bill  and  the  Interstate 
Commerce  Commission,  with  State  boards  of  railroad 
commissioners.  He  deprecates  any  invasion  of  the  rights 
of  the  several  States  to  regulate  their  internal  affairs. 
But  there  is,  throughout  his  entire  argument,  the  same 
reasoning  to  support  the  conclusion  that  national  own- 
ership will  redound  to  the  greatest  good  at  the  lowest 
cost  of  all  the  people,  of  all  the  States. 

From  the  whole  tenor  and  effect  of  Governor  Lara- 
bee's  discourse  it  is  plainly  apparent  that  he  was  only 
restrained  from  advocacy  of  national  ownership  by  a 
fear  of  such  radical  innovations  as  would  come  in  hos- 
tile conflict  with  deep-rooted  ideas  concerning  the  true 
theory  of  republican  government.     He  says: 

"  A  nation  is,  like  the  individual,  inclined  to  follow 
beaten  tracks.  It  finds  it,  as  a  rule,  easier  to  improve 
these  tracks  than  to  abandon  them  and  mark  out  a  new 
course.  Any  proposition  made  for  the  improvement  of 
our  system  of  railroad  transportation  is,  in  the  same 
proportion,  likely  to  receive  the  approval  of  the  masses 
in  which  it  makes  use  of  existing  conditions.  It  will 
therefore  be  my  aim,  in  making  suggestions  as  to  a 
more  efficient  control  of  this  modern  highway,  to  retain 
whatever  good  features  the  present  system  possesses,  and 
to  only  propose  such  changes  as  may  seem  essential  to 
restore  to  the  railroad  the  character  of  a  highway.  As 
has  been  indicated  above,  any  system  of  railway  regu- 
lation, to  be  applicable  to  our  circumstances,  must  recog- 
nize the  dual  sovereignty  of  nation  and  State.  The 
great  majority  of  our  railroad  corporations  were  orig- 
inally created  by  the  States  and  are  only  responsible 
to  the  States  as  long  as  they  do  not  engage  in  inter- 
state commerce.  Even  foreign  corporations  must  sub- 
mit to  all  police  regulations  of  the  State  in  which  they 
do  business,  and  as  long  as  the  American  Constitution 
remains  intact  the  individual  States  will,  and  should, 
20  295 


BOSS  ISM    AND    MONOPOLY 

assert  their  right  to  regulate  local  traffic  and  to  exer- 
cise police  supervision  over  all  railroads  crossing  their 
boundaries." 

Following  beaten  paths  is  incompatible  with  the  idea 
of  radical  reform  such  as  all  admit  is  necessary.  We 
must  not  lose  sight  of  the  magnitude  and  the  dangerous 
character  of  the  evil  to  be  removed.  Railroad  tyranny 
in  the  United  States  is  no  less  burdensome  than  was 
feudalism  in  ancient  England  or  taxation  without  rep- 
resentation, which  is  one  feature  of  the  railroad  prob- 
lem. The  latter  grievance  led  to  the  separation  from 
England,  and  must  lead  to  a  separation  of  transporta- 
tion from  private  dominion.  The  "  beaten  path  "  was 
good  enough  for  the  corporations  in  Prussia,  Austro- 
Hungary,  Belgium,  Germany,  France,  Australia,  and 
other  countries,  but  new  paths  proved  very  much  better 
for  the  people  in  all  of  them.  A  nation  should  not 
necessarily  be  like  an  individual  in  this  or  in  other 
things.  A  nation  should  intelligently  consider  the  well- 
being  of  all  the  individuals  which  it  represents.  This 
is  not  saying  that  it  should  reflect  the  opinions  of  a 
minority;  but,  if  we  mistake  not,  a  vast  majority  in 
this  country  are  now  willing  to  profit  by  the  experience 
of  foreign  nations.  Governor  Larabee  says  any  rail- 
road system  should  be  applicable  to  our  circumstances 
and  must  recognize  the  dual  sovereignty  of  nation  and 
State.  Until  it  is  shown  that  national  ownership  of 
interstate  railroads  would  interfere  with  this  sovereign 
relation,  this  suggestion  need  not  be  considered.  The 
only  duty  of  a  State  government  in  the  matter  of  trans- 
portation would  be  in  direct  line  of  that  of  the  General 
Government.  Both  are  interested  in  protecting  the  peo- 
ple from  oppression  and  in  securing  cheap,  safe,  and 
efficient  service.  The  people  of  the  several  States  will 
quickly  recognize  the  wisdom  of  relegating  these  matters 
of  interstate  concern  exclusively  to  the  Federal  Govern- 

296 


VIEWS    OF    OTHERS 

ment;  and  as  to  such  matters  as  are  local  to  the  States 
there  may  be  perfect  harmony  between  Federal  and 
State  legislation.  Further  on  the  author  admits  the 
feasibility  of  securing  complete  harmony  and  coopera- 
tion between  Federal  and  State  commissions.  If  this 
be  so  as  between  mere  executive  arms  of  the  two  gov- 
ernments, why  not  as  between  the  two  governments 
themselves  when  the  greater  owns  the  subject  to  be 
regulated.''  The  weakness  and  worthlessness  of  regula- 
tion through  State  boards  is  shown  in  the  utter  disre- 
gard of  the  railroad  companies  for  the  orders  and 
decrees  of  such  bodies  when  independent,  and  the  fre- 
quency with  which  they  fall  into  the  power  and  under 
the  influence  of  the  railroad  companies.  And,  notwith- 
standing that  the  subject  of  State  regulation  has  been 
constantly  agitated  since  1869,  when  the  first  railroad 
commission  was  established  with  restricted  powers,  the 
number  of  States  which  have  established  commissions,  or 
taken  any  steps  to  regulate  railroad  corporations,  is 
still  comparatively  small.  The  hopelessness  of  relief 
from  this  source  is  virtually  admitted  by  Governor 
Larabee  in  these  words: 

"  To  quiet  the  Granger  movement  the  railroads 
favored,  and  finally  secured,  the  adoption  of  the  com- 
missioner system  in  the  West  and  the  South,  in  which 
sections  it  attained  its  highest  development.  It  was 
soon  found  that  a  commission  after  the  Massachusetts 
model,  when  composed  of  men  less  competent  or  less  dis- 
posed to  do  their  duty,  was  liable  to  dwindle  into  a 
statistical  board,  or  even  become  a  pliant  tool  in  the 
hands  of  the  railroads.  Furthermore,  the  conditions  in 
Massachusetts,  where  railroad  owners  and  railroad  pa- 
trons lived  side  by  side,  and  were  in  many  instances  even 
identical,  differed  materially  from  those  found  in  the 
West  and  South,  where  railroad  patrons  were  made  to 
pay  excessive  rates  to  produce  liberal  dividends  on  fic- 

297 


BOSS  ISM    AND    MONOPOLY 

titious  stocks  for  non-resident  stockholders.  Here  a 
conflict  between  the  railroads  and  such  commissions  as 
were  determined  to  do  their  duty  became  often  unavoid- 
able. Railroad  companies  were,  as  a  rule,  disposed  to 
disregard  the  recommendation  of  the  commission  to 
reduce  exorbitant  rates." 

In  his  Philadelphia  speech  the  President  very  wisely 
said :  "  No  finally  satisfactory  result  can  be  expected 
from  merely  State  action.  The  action  must  come 
through  the  Federal  Government.  The  business  of  the 
country  is  now  carried  on  in  a  way  of  which  the  found- 
ers of  our  Constitution  could  by  no  possibility  have  had 
an  idea.  All  great  business  concerns  are  engaged  in 
interstate  commerce.  .   .   ." 

That  regulation  through  a  national  bureau  would 
not  be  any  better  is  also  indirectly  admitted  by  the 
author  of  "  The  Railroad  Question."  He  says  (page 
431): 

"  It  must  be  admitted  that  nearly  all  the  evils  con- 
nected with  interstate  transportation  could  soon  be 
remedied  were  it  not  for  the  difficulties  which  the  Inter- 
state Commerce  Commission  encounters  in  the  enforce- 
ment of  the  law.  On  the  one  hand,  it  is  not  possible 
with  the  machinery  at  present  provided  to  detect  and 
prove  a  considerable  part  of  the  violations  of  which 
railroad  managers  are  daily  guilty ;  and,  on  the  other 
hand,  if  these  violations  are  brought  to  light,  there 
would  not,  according  to  the  testimony  of  a  prominent 
railroad  man,  be  courts  enough  in  the  country  to  try 
the  violators.  Besides  this,  such  is  the  artfulness  of 
railroad  managers  that  in  a  majority  of  cases  it  would 
be  impossible  to  reach  the  guilty  party,  and  subordi- 
nates would  have  to  answer  for  the  transgressions  of 
their  superiors." 

It  is  also  to  be  noted  that  decisions  of  the  Federal 
courts    have    withdrawn    from    State    commissions    and 

298 


VIEWS    OF    OTHERS 

vested  in  themselves  practically  all  judicial  discretion 
over  the  subject  of  rates.  Thus,  in  the  Iowa  rate  cases, 
Justice  Brewer  decided  that  "  where  the  rates  prescribed 
will  not  pay  some  compensation  to  the  owners,  then  it 
is  the  duty  of  the  courts  to  interfere  and  protect  the 
companies  from  such  rates."  Then  he  defined  compen- 
sation by  saying  that  it  implied  three  things :  "  Pay- 
ment of  cost  of  service,  interest  on  bonds,  and  then  some 
dividends."  So  the  present  state  of  the  law,  as  inter- 
preted by  the  highest  courts  in  the  nation,  makes  the 
reasonableness  of  rates  a  judicial  matter  dependent  upon 
the  sense  of  justice,  and  the  whims  and  prejudices  of 
the  Federal  judge  having  jurisdiction  in  the  particular 
State  where  the  question  arises.  There  would  be  no 
room  or  necessity  for  judicial  interpretation  or  opinion 
of  reasonableness  if  the  Government  owned  the  roads. 
The  rate  fixed  would  be  accepted  as  final  and  just,  as 
in  the  matter  of  postal  rates.  The  absurdity  of  this 
proposed  rule  of  Justice  Brewer  is  exposed  by  the  Inter- 
state Commerce  Commission  in  these  words : 

"  This  comes  nearer  to  a  suggestion  of  a  rule  of  law 
for  these  cases  than  any  other  that  has  come  to  the 
knowledge  of  the  commission.  But  it  is  so  far  from 
being  a  rule  of  law  that  it  is  not  even  a  rule  of  policy, 
or  a  practical  rule  to  which  any  name  can  be  given, 
and  to  which  the  carriers  themselves  or  the  public  au- 
thorities can  conform  their  action.  In  the  first  place, 
when  we  take  into  consideration  the  question  of  the  con- 
dition of  roads  and  of  equipment,  the  proper  improve- 
ments to  be  made,  the  new  conveniences  and  appliances  to 
be  considered  and  made  use  of,  if  deemed  desirable,  and 
the  innumerable  questions  that  are  involved  in  the  mat- 
ter of  running  expenses,  it  is  very  obvious  that  there  can 
be  no  standard  of  expenses  which  the  court  can  act  upon 
and  apply,  but  that  the  whole  field  is  one  of  judgment 
in  the  exercise  of  a  reasonable  discretion  by  the  manag- 

299 


BOSSISM    AND    MONOPOLY 

ing  powers  or  by  the  public  authorities  in  reviewing 
their  action.  It  is  to  be  borne  in  mind  that  there  are 
many  roads  in  the  country  that  never  have  been,  and 
in  all  probability  will  never  be,  able  to  pay  their  obli- 
gations and  to  pay  dividends — even  the  slightest — to 
their  stockholders.  ...  If  the  rule  suggested  is  a  cor- 
rect one,  and  must  be  adhered  to  by  the  public  authori- 
ties, then  it  is  entirely  impossible  that  those  who  operate 
these  roads  can  prescribe  excessive  charges,  since  it  is 
impossible  to  fix  any  rates  that  would  bring  their  reve- 
nues up  to  the  point  of  enabling  them  to  pay  any  divi- 
dends. .  .  .  But  the  rule  suggested  would  also  be  one 
under  which  these  roads  would  be  entitled  to  charge  the 
most  which,  instead  of  being  built  with  the  money  of 
the  stockholders  themselves,  has  been  constructed  with 
money  borrowed,  the  larger  the  debt,  the  higher  being 
the  rates  which  would  be  legal.  If  a  road  were  out  of 
debt,  so  that  it  had  no  bonds  to  provide  for,  it  must 
content  itself  with  such  rates  as  would  pay  some  divi- 
dends to  its  stockholders.  If  the  road  were  in  debt, 
though  it  perhaps  served  the  same  communities,  it  might 
be  entitled  to  charge  rates  fifty,  or  possibly  one  hun- 
dred, per  cent  higher.  .  .  .  But  over  and  beyond  all 
this,  the  attempt  to  apply  the  rule  suggested  would 
be  absolutely  futile  for  the  reason  that  the  rates  pre- 
scribed for  one  road  would  necessarily  affect  all  others 
that,  either  directly  or  indirectly,  come  in  competition 
with  it." 

Nevertheless,  the  number  of  Federal  judges  who  are 
officially  inclined  to  favor — or,  as  they  term  it,  pro- 
tect— the  railroads  is  constantly  increasing.  The  plans 
proposed  by  the  above-mentioned  authors  would  vest  in 
the  Government  a  supervision  of  the  details  and  minutiae 
of  the  railroad  business  of  the  country  "no  less  strict 
and  inquisitorial  than  would  be  required  of  it  as  owner. 
Such  a  relation  is  incompatible  with  private  ownership, 

300 


VIEWS    OF    OTHERS 

and  would  prove  so  odious  as  to  prevent  its  enforcement. 
The  plan  includes  the  establishment  of  an  inspection 
service  similar  to  that  now  maintained  by  the  Post 
Office  and  Treasury  departments.  The  magnitude  of 
this  scheme  and  the  unavoidable  expense  of  carrying  it 
into  practice  may  be  readily  conceived.  The  number 
of  employees  required  to  keep  track  of  the  business  and 
report  periodically  upon  the  condition  of  several  hun- 
dred railroads  would  be  no  inconsiderable  proportion  of 
the  number  required  to  operate  them.  It  would  require 
an  army  of  officialdom,  which  would  be  a  constant  annoy- 
ance to  the  citizen  and  an  immense  financial  burden. 

To  remedy  the  frauds  practiced  upon  stockholders 
by  "  freezing  "  them  out,  and  other  abuses  of  the  pres- 
ent chaotic  financing,  the  author  of  "  The  Railroad 
Question  "  purposes  that  the  State  should  "  compel  rail- 
road companies  to  liquidate  all  of  their  bonded  indebted- 
ness without  unnecessary  delay."  To  do  this  would 
undoubtedly  place  the  railroads  of  the  country  on  a 
sound  basis;  but  during  the  process  of  liquidation  what 
would  become  of  their  patrons,  from  whom  the  money 
would  have  to  be  taken  to  pay  several  billion  dollars  of 
indebtedness?  The  immediate  enactment  and  enforce- 
ment of  such  a  law  would  be  to  place  all  the  railroad 
bonds  at  par  and  enormously  increase  railroad  rates. 
National  ownership  contemplates  the  appraisement  of, 
and  payment  for,  the  railroads  at  their  real  value,  not 
counting  the  value  of  the  franchises,  which  belong  pri- 
marily to  the  public,  to  which  they  would  immediately 
revert  upon  the  cessation  of  private  ownership.  The 
larger  part  of  railroad  capitalization  represents  the 
value  of  franchises  which  the  railroads  enjoy  by  grace 
of  the  State  temporarily,  but  wliich  they  never  did  own 
in  any  true  sense  of  the  word.  These  franchises  have 
been  recklessly  accepted  by  incumbrancers  as  security 
for  indebtedness;  but  the  right  to  mortgage  them  at  all 

301 


BOSSISM    AND    MONOPOLY 

is  subject  to  the  right  of  the  State  to  withdraw  them  at 
any  time  for  good  cause.  That  feature  of  Governor 
Larabee's  plan  would  devolve  upon  the  Government  all 
the  labor  and  expense  of  railroad  management,  without 
the  privilege  of  ownership,  which  would  be  a  clear  loss 
to  the  people  and  a  clear  gain  to  the  railroad  com- 
panies, however  strict  and  inquisitorial  the  Government 
regulation. 

The  plan  of  reform  of  George  H.  Lewis,  Esq.,  a 
member  of  the  Des  Moines  bar,  is  national  consolidation 
through  the  agency  of  a  great  national  corporation. 
In  1893  there  issued  from  his  pen,  and  was  published,  a 
most  learned  and  interesting  work  embodying  his  ideas, 
the  title  being  "  National  Consolidation  of  Railroads." 
Like  Governor  Larabee,  his  contemporary  in  this  fer- 
tile field  for  investigation  and  suggestion,  he  advanced 
unanswerable  arguments  for  governmental  ownership 
and  direct  Government  management,  but  stopped  just 
short  of  indorsing  that  solution  of  the  problem.  He 
must  have  the  credit,  however,  of  having  ventured  fur- 
ther toward  the  goal  of  national  ownership  than  any 
other  American  writer  of  an  elaborate  treatise  on  the 
subject  of  transportation.  His  plan  is,  really,  owner- 
ship by  the  General  Government,  but  provides  for  the 
interposition  of  a  corporation  created  by  Congress,  under 
the  supervision  and  in  the  name  of  which  all  the  railroad 
property  in  the  nation  is  to  be  acquired  through  an 
appraisement  and  valuation,-  in  all  essential  respects 
amounting  to  condemnation,  under  the  power  of  eminent 
domain.  While  he  gives  the  great  change  the  name  of 
consolidation,  it  would  not,  if  carried  out,  constitute 
consolidation  in  the  legal  sense  of  the  word,  because  the 
new  corporation  formed  by  a  consolidation  is  created 
by  the  amalgamation  of  preexistent  corporations  which 
merge  to  form  one  succeeding  corporation.  Mr.  Lewis's 
plan  provides  for  the  creation  of  a  corporation  and  the 

303 


VIEWS    OF    OTHERS 

destruction  of  the  original  corporations.  The  distinc- 
tion, however,  is  of  httle  importance,  since  the  end  to  be 
accomplished  is  the  same,  whatever  the  legal  technique 
by  which  it  is  described.  Its  consummation  could  doubt- 
less be  as  easily  reached  as  by  direct  action  in  the  name 
of  the  United  States  and  through  a  direct  exercise  of 
its  powers.  But  this  question  naturally  arises:  Why 
should  the  Government,  having  this  undoubted  power, 
delegate  it  to  an  intermediary,  though  the  latter  be  a 
creature  of  its  own  laws?  Mr.  Lewis  presents  able  and 
conclusive  arguments  in  support  of  the  proposition  that 
the  Federal  Government  has  the  constitutional  power  to 
acquire  title  to  the  railroad  property  by  the  indirect 
method  proposed  by  him,  and  the  same  arguments,  of 
course,  demonstrate  that  the  Government  may  constitu- 
tionally accomplish  the  same  object  directly.  No  rea- 
sons are  assigned  for  preferring  the  indirect  to  a  direct 
proceeding;  but  this  plan,  put  into  practice,  would  ap- 
proach so  nearly  direct  government  control,  as  well  as 
ownership,  that  it  commends  itself  to  all  friends  of 
radical  reform  as  a  long  step  in  the  right  direction. 

It  appears  proper  in  this  connection  to  discuss  some 
of  the  suggested  remedies  for  the  "  trust  "  evil,  consid- 
ered as  a  matter  separate  from  the  transportation  prob- 
lem. It  is  rendered  germane  by  the  fact  that,  in  the 
next  chapter,  the  writer  suggests  the  uses  that  can  be 
made  of  government  ownership  and  operation  as  a  com- 
plete remedy,  or  rather  as  an  effective  antidote,  for  the 
same  public  grievance. 

The  Commissioner  of  the  Bureau  of  Corporations, 
bon-owing  an  idea  from  the  Democratic  platform  of 
1900,  offers  as  a  remedy  for  "  trusts  "  what  may  be 
properly  termed  the  license  plan.  The  originator  of 
the  license  plan  is,  as  is  generally  well  known,  Hon. 
William  J.  Bryan.  It  is  with  reluctance  that  the  writer 
objects  to  Mr.  Bryan's  remedy.    Were  it  merely  a  ques- 

303 


BOSSISM    AND    MONOPOLY 

tion  of  policy  he  would  incline  to  defer  to  the  greater 
wisdom  of  Mr.  Bryan,  but  there  are  objections  based 
upon  the  inherent  weakness  of  the  plan  and  the  loss  of 
valuable  time  pending  a  trial.  Some  attention  was 
given  to  it  in  Chapter  I. 

The  license  plan,  as  restated  by  Mr.  Bryan  in  a 
recent  issue  of  Public  Opinion,  is  as  follows :  "  The  plan 
contemplates  a  law  requiring  corporations  engaged  in 
interstate  commerce  to  take  out  a  Federal  license,  upon 
terms  and  conditions  to  be  prescribed  by  the  law.  Under 
this  plan,  a  corporation  organized  in  a  State  could  do 
business  in  that  State  without  interference  from  with- 
out. The  people  of  the  State  could  be  trusted  to  regu- 
late such  corporations  in  their  own  interest  and  for  their 
own  protection.  The  moment  a  corporation  organized 
in  any  State  attempts  to  do  business  outside  of  the  State, 
it  enters  the  sphere  of  interstate  commerce  and  comes 
under  the  scrutiny  of  the  Federal  authorities.  A  law 
requiring  a  license  could  be  easily  complied  with  by 
legitimate  corporations.  If,  for  instance,  the  law  re- 
quired a  corporation  applying  for  license  to  show  that 
there  was  no  water  in  its  stock,  and  that  it  was  not 
trying  to  monopolize  any  branch  of  business  or  the  pro- 
duction of  any  article  of  merchandise,  it  would  impose 
no  hardship  upon  the  corporation,  because  the  evidence 
would  be  at  hand  and  the  legitimate  corporation  could 
well  afford  to  take  the  trouble  to  secure  a  license  in 
order  to  obtain  protection  from  corporations  bent  upon 
monopoly."  By  way  of  advocacy  of  this  plan,  he  says 
that  "  it  strikes  in  such  a  way  as  to  disable  the  monop- 
oly without  injuring  any  other  corporations."  Whether 
it  would  strike  at  the  root  of  the  evil  may  be  a  question 
upon  which  minds  differ,  but  one  objection  that  lies 
against  it  is  that  it  would  strike  too  many  other  things 
besides  the  root  of  the  monopoly  evil.  The  great  defect 
in  this  plan  is  that  it  does  not  have  due  regard  for  the 

304 


VIEWS    OF    OTHERS 

narrowness  of  the  definition  of  interstate  commerce  and 
limitations  upon  the  scope  of  congressional  power  in 
dealing  with  the  subject,  as  explained  in  numerous  Su- 
preme Court  decisions,  notably  in  United  States  vs. 
E.  C.  Knight  et  al  {156  U.  S.  Rep.,  1).  And  in  Daniel 
vs.  The  United  States  (19  L.  Ed.,  1002),  the  meaning 
of  interstate  commerce  is  limited  to  the  movement  of 
the  articles  from  one  State  to  another.  This  movement 
is  held  not  to  begin  until  the  articles  have  been  shipped 
or  started  for  transportation  from  one  State  to  another 
— Coe  vs.  En-ol  (116  U.  S.  Rep.,  517). 

It  is  true  that  there  is  no  conflict  between  the  license 
plan  and  government  ownership,  the  former  being  in- 
tended to  reach  what  are  known  as  industrial  trusts. 
But  unless  transportation  can  be  controlled,  all  other 
remedies  are  likely  to  prove  abortive.  The  trusts  have 
been  extensively  aided  by  railway  rebates  and  discrimi- 
nations, as  all  concede.  The  principal  objection,  how- 
ever, relates  to  difficulties  of  enforcement,  already  dis- 
cussed in  another  connection.  But  it  may  be  further 
suggested  here  that  such  a  law  could  be  easily  evaded 
if  not  made  applicable  to  individuals,  copartnerships, 
and  voluntary  associations,  as  well  as  to  corporations. 
If  so  framed  it  would  apply  to  a  considerable  percent- 
age of  the  whole  population,  and  would  still  be  easily 
evaded  or  require  an  utterly  impracticable  degree  of 
supervision  and  extent  of  administration. 

Still  more  vain  is  it  to  expect  relief  from  a  Federal 
incorporation  law,  as  has  been  suggested.  This  idea  is 
based  upon  the  view  that  Congress,  under  whose  acts 
corporations  might  be  enacted,  could,  on  account  of  such 
authority  for  their  creation,  control  them  when  engaged 
in  interstate  commerce.  But,  without  setting  forth  other 
grounds  for  objection,  it  is  sufficient  to  say  that,  unless 
some  constitutional  power  can  be  shown  to  compel  exist- 
ing corporations  to  surrender  their  charters  granted  by 

305 


BOSSISM   AND   MONOPOLY 

the  States,  and  incorporate  under  such  Federal  act,  it 
would  afford  no  remedy  either  against  existing  railroad 
corporations  or  those  complained  of  as  "  trusts  " ;  nor 
could  future  organizations  be  compelled  to  elect  to  in- 
corporate under  its  provisions.  Senator  Frank  G.  New- 
lands  is  urging  a  measure  for  national  incorporation. 
All  that  he  will  accomplish  will  be  a  division  in  the  ranks 
of  those  friendly  to  reform. 

Judge  Peter  S.  Grosscup,  writing  for  McClure^s 
Magazine,  for  February,  1905,  vaguely  hints  at  a 
remedy  for  the  monopolization  of  wealth  and  opportu- 
nity, but  just  what  he  proposes  is  difficult  to  ascertain, 
unless  it  be  a  cooperative  plan;  besides,  he  makes  no 
pretense  of  suggesting  ways,  means,  or  procedure  for 
its  attainment,  whatever  it  is.  The  main  trouble  with 
him  appears  to  be  that  he  is  restrained  by  his  environ- 
ment as  a  federal  judge  and  the  extremely  conservative 
record  he  has  made  in  that  office,  as  well  as  by  his  outlook 
upon  the  social  and  economic  world  simply  as  a  humani- 
tarian, blinded  somewhat  by  partisan  bias.  He  sees  all 
the  evils  of  present  conditions  and  tendencies  in  as  strong 
light  as  the  rankest  socialist  sees  them,  and  his  fore- 
bodings are  as  gloomy  as  the  gloomiest.  And  yet  the 
only  hope  of  relief  that  he  can  discover  depends  for  its 
fulfilment  upon  the  voluntary  reversal  by  the  financiers 
responsible  for  present  conditions  of  their  policies,  and 
the  substitution  for  them,  by  the  same  financiers,  of 
economic  policies  exactly  similar  to  those  contended  for 
by  the  Socialist  Labor  Party  (an  organization  whose 
principles  differ  but  slightly  from  those  of  the  State 
Socialists).  And  he  does  this  notwithstanding  that,  in 
the  same  article,  he  condemns  one  of  the  leading  national 
parties  for  advocating  what  he  terms  "  semi-socialism." 

Some  of  those  who  object  to  government  OAVTiership, 
because  of  its  being  a  step  toward  socialism,  offer  a 
counter  suggestion:  that  the  existing  method  of  form- 

306 


VIEWS    OF    OTHERS 

ing  a  corporation,  and  offering  its  stock  to  the  public 
as  an  investment,  be  tried  by  public  authority  as  a 
species  of  "  enlightened  socialism."  The  people  have 
had  some  costly  lessons  in  that  style  of  enlightenment. 
It  is  merely  a  stock-market  scheme. 

The  employees  of  the  Steel  Trust  who  were  fraudu- 
lently induced  to  invest  their  earnings  in  its  stock  at 
promotion  prices  could  give  valuable  testimony  as  to 
the  workings  of  that  plan.  This  kind  of  "  enlightened 
socialism  "  is  not  a  new  thing.  It  is  the  brand  of  which 
Standard  Oil  and  Wall  Street  are  so  fond,  and  the 
only  kind  they  approve.  Under  government  ownership 
of  railroads  the  rich  may  invest  their  accumulations, 
the  business  man  his  profits,  and  the  poor  his  earnings 
without  the  risk  of  being  defrauded  or  of  losing  the 
investment.  Besides,  each  investor  may  have  an  effective 
vote  in  the  selection  of  the  management — which,  indeed, 
he  may  have  with  the  corporation  plan;  but,  under  the 
latter,  what  effect  has  his  vote  as  against  those  in  con- 
trol ?  "  Oh,  yes !  "  the  suggester  says ;  "  but  the  indi- 
vidual holders  of  the  stock  can  combine."  But  this 
ignores  the  almost  insuperable  difficulties  of  various 
separating  agencies,  such  as  distance,  lack  of  acquaint- 
ance, differences  of  opinion,  etc.  Railroad  and  trust 
managers  have  long  since  learned  of  these  difficulties 
and  taken  every  advantage  of  them. 

We  may  illustrate  by  supposing  a  corporation  has 
1,000,000  shares.  Suppose  A  and  four  others  doing 
business  in  New  York  have  each  50,000  shares,  with 
750,000  outstanding  among  75,000  individuals  in  vari- 
ous States,  each  holding  10  shares.  It  would  be  a 
practical  impossibility  for  one-third  of  the  latter  to 
meet,  as  it  would  for  them  to  agi'ee,  if  they  did  meet, 
upon  a  board  of  directors.  So  a  few  of  them  send 
proxies  to  directors  or  officers ;  some  attend  the  meeting, 
while  others  give  the  annual  meeting  and  election  little 

307 


BOSSISM    AND    MONOPOLY 

or  no  thought,  leaving  A  and  the  other  New  Yorkers, 
with  their  sohd  block  of  250,000  shares  and  their  prox- 
ies, to  elect  themselves  to  the  board,  and  thence  into  the 
executive  offices.  In  practice  a  much  smaller  amount 
of  stock  would  be  sufficient  for  securing  and  holding 
control.  Ten  per  cent  held  by  a  single  interest  would 
usually  suffice. 

Among  the  proposed  remedies  are  the  single  tax  and 
socialism,  which  are  not  offered  merely  as  specifics  for 
the  monopoly  evil,  but  to  effect  the  eradication  of  most 
or  all  industrial  evils  and  abuses.  Each  is  too  far- 
reaching  to  entitle  it  to  examination  here. 

Publicity  of  all  internal  affairs  of  corporations  en- 
gaged in  interstate  trade  has,  strangely  enough,  been 
considered  of  sufficient  importance  as  an  anti-trust  meas- 
ure to  lead  to  its  indorsement  in  a  presidential  message 
to  Congress  and  the  establishment  of  a  new  commission, 
styled  "  Bureau  of  Corporations."  It  may  be  remarked 
here,  incidentally,  that  no  fact  not  generally  known 
long  in  advance,  or  that  any  corporation  would  care  to 
conceal,  has  ever  come  to  the  knowledge  of  the  head  of 
the  bureau,  nor  is  he  likely  ever  to  obtain  any  infor- 
mation that  any  corporation  would  not  be  willing  to 
have  published  as  a  free  advertisement  of  its  business. 
But  the  publicity  proposition  as  a  preventive  or  pallia- 
tive of  the  monopoly  evil  is  ill-conceived  and  vain,  as 
would  be  a  cannon  shot  aimed  at  the  moon.  A  pretext 
for  such  a  purely  ornamental  functionary  was  found 
in  the  well-known  fact  that  certain  corporations,  great 
and  small,  have  issued  stocks  far  in  excess  of  the  value 
of  any  property  values  possessed  by  them.  If  that  be 
wrong — and  whether  it  be  such  is  a  question  about  which 
there  are  grounds  for  differences  of  opinion — it  is,  at 
least,  not  one  on  which  the  commissioner  can  possibly 
shed  a  particle  of  light  or  give  any  additional  pub- 
licity.    There  is  really  nothing  pertaining  to  the  sub- 

308 


VIEWS    OF    OTHERS 

ject  of  stock  watering  that  cannot  be  more  easily  and 
cheaply  learned  than  by  consulting  any  data  he  could 
obtain  or  keep  on  file.  For  a  small  sum,  full  informa- 
tion as  to  various  issues  of  stocks  and  bonds,  dealt  in 
extensively  by  each  and  every  corporation,  can  be  ob- 
tained in  printed  form  in  Wall  Street.  Tliis  includes 
the  issues  by  the  so-called  industrial  trusts.  As  to  other 
corporations,  or  even  as  to  those  last  mentioned,  how 
is  it  any  concern  of  the  Government.'^  Is  it  for  the 
protection  of  those  who  have  made  or  contemplate  mak- 
ing investments.'*  He  who  has  no  more  definite  knowl- 
edge of  any  corporate  scheme  endeavoring  to  sell  its 
shares  than  such  a  bureau  could  acquire  had  better  keep 
his  money  in  a  bank.  But  why  should  the  people  be 
taxed  for  the  benefit  of  a  particular  class  of  investors.? 
Why  should  the  Government  assume  guardianship  of 
stock  speculators  or  investors  any  more  than  of  any 
other  equal  number  of  individuals.?  And  what  interest 
have  those  who  are  compelled  to  buy  trust-made  goods 
in  the  subject  anyhow.?  Congress  complied  with  the 
President's  request  and  made  the  required  appropria- 
tion. Supposing,  apparently  not  without  reason,  that 
nothing  more  was  desired,  it  made  no  better  provision 
for  the  disposal  of  the  information  to  be  obtained  than 
that  it  should  be  reported  to  the  President.  And  yet 
it  is  called  a  bureau  of  publicity !  The  head  of  the 
bureau  seems  to  be  holding  a  sort  of  roving  commission. 
He  is  heard  of  first  in  Chicago,  where  he  made  a  report 
on  the  "  Beef  Trust."  It  is  perhaps  just  as  well  not  to 
add  to  the  comment  already  made  upon  that  report. 
Next  he  goes  to  Kansas  and  California,  ostensibly  to 
investigate  the  Standard  Oil  Company,  but  apparently 
merely  to  have  himself  interviewed  and  written  up  in 
the  newspapers.  The  good-natured,  easy-going  people 
of  the  country  see  in  all  this  merely  the  case  of  a  very 
respectably    connected    and    well-meaning    young    man 

309 


BOSSISM    AND    MONOPOLY 

making  a  spectacle  of  himself;  but  a  little  reflection 
would  reveal  to  them  that  tliis  is  one  of  the  many  rea- 
sons for  an  alarming  Treasury  deficit. 

Overcapitalization,  or  stock  watering,  merely  per- 
tains to  the  internal  management  of  the  monopoly  in 
corporate  form.  It  may  be  a  means  of  deception  upon 
the  public,  but  it  does  not  affect  interstate  commerce  or 
the  general  welfare  of  the  people  of  the  States  in  such 
a  way  as  to  warrant  legislative  supervision  or  inter- 
ference by  the  Federal  Government.  It  is  not  an  essen- 
tial part  of  a  corporate  scheme  for  getting  monopoly 
control  of  a  commodity.  It  is  a  scheme  in  itself,  outside 
of  the  thing  called  monopoly,  for  which  remedies  are 
afforded  and  against  which  interstate  commerce  and 
anti-monopoly  laws  are  directed.  If  stock  watering  be 
an  evil,  it  belongs  to  the  class  of  wrongs  which  can  only 
be  dealt  with  under  State  laws.  But  it  would  be  going 
far  to  say  that  where  men  form  a  corporation — in  New 
Jersey,  for  instance — and  turn  over  to  it  property  worth 
$1,000,000,  they  may  not  capitahze  it  at  $2,000,000, 
and  undertake  by  fair  means  to  sell  the  stock  for  the 
latter  amount,  or  for  any  other  sum  that  they  are  able 
to  obtain.  And  if  they  sell  for  $2,000,000,  and  the 
corporation  earns  profits  sufficient  to  regularly  pay 
four-per-cent  dividends  on  the  $2,000,000  issue,  the 
stock  will  be  rated  as  one  that  ought  to  sell  at  par, 
though  it  may  actually  sell  for  less.  These  suggestions 
are  not  to  be  construed  as  a  defense  of  overcapitaliza- 
tion or  stock  watering,  out  of  which  much  fraud  has 
grown.  They  are  merely  intended  to  show  that  it  is 
a  subject  too  intricate,  too  local,  too  dependent  upon 
the  circumstances  of  each  case,  too  limited  as  to  the  num- 
ber of  individuals  to  be  affected,  too  much  a  mere  mat- 
ter of  opinion  as  to  values,  and,  finally,  too  far  unre- 
lated to  any  head  of  legislation  against  restraint  of 
interstate  commerce,  to  be  made  a  subject  of  Federal 

310 


VIEWS    OF    OTHERS 

interference.  That  the  creation  and  maintenance  of  a 
monopoly  does  not  rest  upon  inflated  stock  issues  is  seen 
in  the  case  of  the  Standard  Oil  Company,  the  greatest 
and  most  absolute  monopoly  in  the  world.  No  doubt, 
if  a  controlling  interest  were  offered  for  sale,  its  shares, 
having  a  par  value  of  $100,  would  sell  for  $1,000  per 
share,  or  even  more.  Ex-Speaker  Thomas  B.  Reed, 
speaking  on  the  same  subject,  once  said:  "Almost 
everybody  announces  that  what  we  need  is  '  publicity.' 
Even  this  is  vague.  Do  you  expect  the  public  to  be 
intrusted  with  the  cost  sheets?  If  you  do  not,  then 
what  will  your  publicity  amount  to?  If  you  mean  by 
'  publicity  '  such  a  statement  as  will  enable  the  out- 
sider to  buy  wisely,  or  the  stockholder  to  sell  at  the 
true  value,  I  fear  we  may  be  going  beyond  the  province 
of  free  government,  which  certainly  thus  far  has  left 
the  task  of  keeping  his  fingers  out  of  the  fire  to  the 
citizen  whose  fingers  they  were." 

The  writer  has  thus  clearly  and  fearlessly  stated 
and  discussed  the  current  propositions  for  legislation 
against  the  monopoly  evil,  and  shown  that  they  are 
worthless  or  impracticable  because  aimed  at  mere  inci- 
dents, or  are  misconceived  on  account  of  a  lack  of 
understanding  of  legal  and  constitutional  phases,  or 
because  too  inquisitorial,  tedious,  and  expensive,  or  con- 
template the  complete  overturning  of  representative 
government  and  the  substitution  of  communism  or  so- 
cialism. He  believes  the  legal  and  economic  propositions 
hereinbefore  stated  to  be  unassailable;  and  yet  sets  up 
no  claim  by  right  of  discovery,  believing  that  all  these 
things  have  been  well  known  and  fully  appreciated  by 
many  party  leaders  both  in  and  out  of  official  station, 
and  that  they  were  not  courageous  and  honest  enough 
to  make  frank  avowals  lest  they  lose  caste  politically, 
financially,  or  socially. 

21  311 


CHAPTER    XVI 

CONSTITUTIONALITY,    FEASIBILITY,    AND    ADVANTAGES    OF 
GOVERNMENT   OWNERSHIP OBJECTIONS  ANSWERED 

That  Congress  has  power,  incidentally  to  the  regu- 
lation of  interstate  commerce,  to  construct,  or  otherwise 
acquire  for  national  use,  railways  or  other  public  ways, 
has  passed  beyond  the  pale  of  speculative  discussion. 
It  is  an  easy  matter  to  suggest  difficulties,  real  and 
imaginary,  in  the  way  of  any  great  undertaking. 
Nothing  of  consequence  or  of  permanent  effect  was  ever 
accomplished  either  by  the  Government  or  by  indi- 
viduals without  overcoming  obstacles.  But  any  govern- 
ment based  upon  popular  will,  subject  to  change,  de- 
siring to  attain  the  ends  of  justice,  will  find  a  way  to 
reach  all  the  necessities  of  a  given  case.  It  is  absurd 
to  say  that  having  established  a  constitutional  govern- 
ment, in  which  the  incumbents  in  all  the  departments 
are  directly  or  indirectly  chosen  by  the  people  and  are 
their  servants,  that  the  people  must  stop  short  of  good 
government ;  in  other  words,  are  not  to  be  trusted  to 
govern  themselves,  but  are  rather  to  remain  in  the  hands 
of  private  corporations.  On  the  same  plea  that  is 
urged  against  public  administration  in  transportation, 
the  Government,  upon  consummation  of  the  Louisiana 
purchase,  should  have  turned  over  the  vast  empire  thus 
acquired  to  individuals  or  corporations  in  trust  for  the 
people.  These  would  no  doubt  have  been  successful  in 
adding  to  the  list  a  score  or  more  of  Rockefellers, 
Astors,  and  Morgans,  but  there  would  have  been  fewer 

S12 


GOVERNMENT    OWNERSHIP 

happy  homes  in  the  West  than  are  to  be  found  to-day. 
The  Interior  Department  of  the  Government  deals 
largely  with  business  which  could  be  transacted  in  an 
individual  or  corporate  capacity ;  but  who  would  have 
the  hardihood  to  insist  that  the  Department  of  the  In- 
terior shall  be  abolished  and  all  its  details  turned  over 
to  citizens  and  corporations?  This  department,  like 
that  of  the  post  office,  is  a  success.  Why,  then,  should 
we  not  have  a  Department  of  Transportation,  as  have 
some  other  governments? 

That  railroads,  in  resorting  to  the  right  of  eminent 
domain  for  the  condemnation  and  acquisition  of  rights 
of  way  and  terminal  facilities,  exercise  delegated  pow- 
ers of  the  Government  is  well  settled  by  repeated  decla- 
rations and  adjudications  of  the  Federal  and  State 
Supreme  Courts.  The  Supreme  Court  of  the  United 
States,  in  a  comparatively  recent  case,  said :  "  The  State 
would  have  no  power  to  grant  the  right  of  appropria- 
tion, unless  the  use  to  which  the  land  was  to  be  put 
was  a  public  one.  Taking  land  for  railroad  purposes 
is  a  taking  for  a  public  purpose,  and  the  fact  that  it 
is  taken  for  a  public  purpose  is  the  sole  justification  for 
taking  it  at  all."  Such  being  true,  railroads  are  gov- 
ernmental agencies,  liable  to  have  their  agencies  re- 
voked, as  in  the  case  of  any  other  relation  of  principal 
and  agent. 

The  following  utterances  by  the  Supreme  Court  of 
the  United  States  clearly  indicate  the  public  character 
of  the  service  performed  by  common  carriers :  "  The 
business  of  a  public  carrier  is  of  a  public  nature,  and 
in  performing  it  the  carrier  is  also  performing,  to  a 
certain  extent,  a  function  of  government."  And  in  an- 
other case :  "  It  has  never  been  considered  a  matter  of 
any  importance  that  the  road  was  built  by  the  agency 
of  a  private  corporation.  No  matter  who  is  the  agent, 
the  function  performed  is  that  of  the  State.     Though 

313 


BOSSISM    AND    MONOPOLY 

the  ownership  is  private,  the  use  is  public."  Governor 
La  Follette  as  clearly  admits  the  power  of  the  Federal 
Government  to  acquire  and  operate  railroads  or  other 
means  for  transportation,  as  is  possible  by  the  use  of 
language.  He  says :  "  Government  may  conduct  the 
transportation  business  itself,  as  it  does  in  carrying  the 
mails,  and  limited  quantities  of  merchandise  carried 
through  the  mails." 

There  may  be  some  who  have  not  given  sufficient 
study  to  our  constitutional  system  of  government  to 
understand  why  Congress  has  such  limited  powers  over 
the  great  corporations  called  "  Trusts,"  and  yet  has 
power,  without  amendment  of  the  Constitution,  to  ap- 
propriate the  railway  properties  in  the  same  hands  to 
government  use  and  ownership.  The  apparently  incon- 
sistent propositions  are  reconciled  when  it  is  explained 
that  the  limitations  imposed  upon  Congress  are  those  of 
kind  and  not  of  degree.  In  other  words,  where  Con- 
gress has  power  at  all,  its  power  is  unlimited,  within  the 
definition  of  the  power;  but,  when  it  lacks  power,  it  is 
as  impotent  as  any  other  equal  number  of  individuals 
assembled  together  in  any  part  of  the  world.  This  rule 
applies  not  only  to  powers  directly  conferred  by  the 
Constitution,  but  to  the  residuary  power  now  to  be 
discussed. 

The  power  of  eminent  domain,  as  a  power  to  be 
directly  exercised  by  Government  for  the  people  as  a 
whole,  was  not  expressly  given  to  Congress  in  the  Con- 
stitution for  two  reasons.  First,  it  was  a  power  so 
essential  to  the  very  existence  of  the  Government,  under- 
lying the  Constitution  and  being  prior  and  superior  to 
it,  that  it  was  thought  an  express  delegation  of  it  was 
unnecessary,  as  has  been  frequently  explained  by  the 
courts.  Second,  it  was  a  power  of  such  limitless  scope 
and  magnitude,  necessary  to  be  exercised  upon  such  an 
infinite   variety    of    occasions    and    under   such    circum- 

314 


GOVERNMENT    OWNERSHIP 

stances  of  urgency,  that  it  was  thought  not  safe  to  con- 
fer upon  Congress  the  power  to  limit  its  exercise  by 
either  a  failure  to  legislate  at  all  or  by  enacting  laws 
on  the  subject  of  inadequate  scope. 

And  so  it  has  become  as  fully  established  by  law  as 
if  it  had  been  embodied  in  an  elaborate,  unambiguous 
constitutional  provision,  that  there  is  a  residuum  of 
sovereignty  not  given  to  the  legislative,  or  the  execu- 
tive, or  the  judicial  department,  but  reserved  to  be 
exercised  upon  proper,  but  rare  occasions  by  the  execu- 
tive alone,  and  at  any  time  by  Congress  conjointly  with 
the  other  departments.  The  ancient  maxim,  Salus 
populi  est  supreme  lex,  is  an  expression  of  this  re- 
served power  in  terms  of  the  common  law.  When 
President  Lincoln  by  proclamation  freed  the  slaves,  as 
a  war  measure,  that  was  an  exercise  of  this  reserved 
power.  And  although  the  new  rights  of  the  freed  men 
were  subsequently  secured  by  constitutional  amendments, 
which  also  guaranteed  them  political  rights,  their  ex- 
emption from  slavery  was  no  more  secure  after  than 
before  the  amendments.  So,  if  a  war  were  to  suddenly 
spring  up  between  this  nation  and  a  foreign  power 
during  a  recess  of  Congress,  of  such  magnitude  that 
the  national  safety  required  the  immediate  transporta- 
tion of  a  million  soldiers  and  vast  quantities  of  military 
supplies  from  one  part  of  the  country  to  another,  the 
President  could,  in  a  few  hours  after  declaring  war, 
appropriate  by  executive  order  the  full  carrying  ca- 
pacity of  all  water  craft  and  all  railroad  lines  and  equi- 
page that  he  deemed  necessary  for  the  mobilization  of 
the  army  and  navy.  And,  going  to  the  extreme  verge 
of  sovereign  power,  our  Government  could,  in  a  last 
desperate  extremity,  by  going  through  the  form  of 
levying  and  collecting  taxes,  appropriate  for  purposes 
of  common  defense,  without  compensation,  every  form 
of  private  property. 

315 


BOSS  ISM    AND    MONOPOLY 

But,  even  in  the  absence  of  any  constitutional 
provision  whatever,  a  public  sense  of  justice  would  re- 
strain a  government  from  appropriating  to  its  perma- 
nent use,  without  compensation,  the  mechanism  of  trans- 
portation, in  the  absence  of  some  such  emergency  as  that 
above  described.  In  recognition  of  the  existence  and 
controlling  force  of  public  conscience,  the  duty  of  the 
Government  arises  to  award  and  pay  compensation  for 
interstate  railways.  In  ordinary  times  the  executive 
department  is  principally  an  agency  for  the  enforce- 
ment of  statutes  and  court  decrees  as  he  finds  them. 
Hence,  it  will  be  necessary  that  Congress  legislate,  in 
order  to  set  the  wheels  of  the  Government  in  motion,  in 
order  to  accomplish  government  ownership  of  interstate 
railroads,  telegraph  lines,  etc. 

Whenever  remedies  are  proposed  for  wrongs  and 
abuses  of  the  present  railroad  system,  objections  from 
railroad  officials  and  attorneys,  based  upon  alleged  con- 
stitutional grounds,  are  forthcoming.  These  preservers 
of  constitutional  liberty,  in  offering  objections,  presume 
quite  as  much  upon  the  ignorance  of  the  people  as  upon 
the  servility  and  cowardice,  or  "  conservatism,"  of  poli- 
ticians. No  statesman  of  any  period,  not  even  the  strict 
constructionists  of  the  JefFersonian  school,  has  ever  con- 
tended for  a  limitation  upon  the  sovereign  power  of 
eminent  domain,  by  which  is  meant  absolute  govern- 
mental dominion  over  private  property  of  individuals 
and  corporations  when  its  assertion  becomes  necessary 
for  the  attainment  of  a  public  object  or  to  the  due 
performance  of  governmental  functions.  And  it  is  an 
equally  well-established  principle  that  the  legislative 
department  may  not  only  take  private  property  without 
limit,  except  subject  to  the  condition  that  compensation 
shall  be  made  to  the  owner,  but  that  it  may  determine 
and  declare  what  shall  constitute  a  public  use.  Coex- 
tensive with  the  power  which  sovereignty   possesses  to 

316 


GOVERNMENT    OWNERSHIP 

regulate  its  internal  affairs  by  suitable  laws,  and  like- 
wise subject  to  the  condition  that  the  purpose  for  which 
it  is  exercised  must  appertain  to  the  self-preservation 
and  good  government  of  the  community  at  large,  is  the 
right  to  take  private  property  for  public  use  upon 
making  just  compensation  to  the  owner.  The  power 
to  do  this  is  so  essential  to  the  maintenance  of  sover- 
eignty and  the  performance  of  governmental  duties 
by  the  State,  that  it  supervenes  all  private  right,  and 
by  long-established  construction  is  deemed  to  have  been 
implicitly  excepted  from  the  general  terms  of  the  Fed- 
eral Constitution  with  respect  to  the  inviolability  of 
contracts.  The  right  exists  in  the  limited  sovereignty 
of  the  Federal  Government,  as  well  as  in  the  more  ex- 
tensive powers  of  the  States.  Pertaining  to  the  former, 
the  public  use  must  be  within  the  scope  of  its  limited 
powers  and  necessary  for  their  preservation,  but  cannot 
be  exercised  for  the  enlargement  of  such  powers  or  in 
derogation  of  the  reserved  sovereign  rights  of  the  States. 
The  right  of  eminent  domain  in  both  is  commensurate 
with  their  respective  powers. 

The  power  of  eminent  domain  may  be  wielded  in 
a  proper  case,  and  subject  to  the  condition  that  due 
compensation  be  made  against  every  species  of  prop- 
erty whatever  and  from  whatsoever  source  acquired. 
Contracts,  as  well  as  tangible  property  derived  from 
the  State  itself,  are  deemed  to  be  acquired  and  held 
subject  to  the  superior  title  and  ultimate  right  of  revo- 
cation reserved  and  to  be  asserted  by  the  State  when- 
ever required  for  the  public  good.  There  are  two 
exceptions  to  this  statement :  money,  or  that  which  ordi- 
narily passes  as  such ;  and  such  rights  in  action  as  can 
only  be  made  available  when  made  to  produce  money — 
for  instance,  bills  of  exchange,  bank  checks,  etc.  The 
reason  for  these  exceptions  is  that  money  itself  is  an 
instrument  of  sovereignty. 

317 


BOSSISM    AND    MONOPOLY 

Under  the  term  "  property "  are  included  fran- 
chises. In  West  River  Bridge  Company  vs.  Dix  (6 
How.,  507,  531,  533),  the  Court  says:  "  We  are  aware 
of  nothing  peculiar  to  a  franchise  which  can  class  it 
higher  or  more  sacred  than  other  property.  A  fran- 
chise is  property,  and  nothing  more.  ...  A  franchise, 
therefore,  to  erect  a  bridge,  to  construct  a  road,  to 
keep  a  ferry,  and  to  collect  tolls  upon  them,  granted 
by  the  authority  of  the  State,  we  regard  as  occupying 
the  same  position,  with  respect  to  the  paramount  power 
and  duty  of  the  State  to  protect  and  promote  the  pub- 
lic good,  as  does  the  right  of  the  citizen  to  the  posses- 
sion and  enjoyment  of  his  land  under  the  patent  or 
contract  with  the  State;  and  it  can  no  more  interpose 
any  obstruction  in  the  way  of  their  just  exertion.  Such 
exertion  we  hold  not  to  be  within  the  inhibition  of  the 
Constitution,  and  no  violation  of  a  contract.  The 
contracts  between  members  of  a  corporation  and  the 
corporate  interests  of  members  in  its  property,  of  every 
description,  are,  like  other  property,  subject  to  be  ap- 
propriated. Nor  can  there  be  in  any  act  of  incorpo- 
ration any  contract  binding  on  the  State  that  the 
corporation  so  formed  may  not  have  its  operations  sus- 
pended by  the  State  in  the  exercise  of  the  power  of 
eminent  domain." 

In  the  face  of  all  this  law,  we  find  railroad  attor- 
neys contending  that,  because  the  railroads  hold  char- 
ters from  the  several  States,  the  Government  has  no 
right  to  seize  them  by  any  right  of  eminent  domain; 
that,  before  this  could  be  done,  we  must  have  the  Con- 
stitution changed;  and  this  amendment  would  have  to 
be  ratified  by  two-thirds  of  the  States.  Since  a  fran- 
chise acquired  from  the  State — other  than  the  franchise 
of  being  a  corporation — is  merely  property,  it  may  be 
taken  just  like  other  property.  This  proposition  has 
also  been  judicially   settled.      In  the  case  of  Kohl  vs. 

318 


GOVERNMENT    OWNERSHIP 

United  States  (91  U.  S.  Rep.,  367),  a  unanimous 
opinion  was  rendered,  in  the  course  of  which  we  find 
this  lan^age :  "  It  has  been  seriously  contended  during 
the  argument  that  the  United  States  Government  is 
without  power  to  appropriate  lands  or  other  property 
within  the  States  for  its  own  uses  and  to  enable  it  to 
perform  its  own  functions.  Such  an  authority  is  essen- 
tial to  its  independent  existence  and  perpetuity.  These 
cannot  be  preserved  if  the  obstinacy  of  a  private  per- 
son, or  if  any  other  authority  can  prevent  the  acquisi- 
tion of .  the  means  or  instruments  by  which  alone  the 
governmental  functions  can  be  performed.  The  powers 
vested  by  the  Constitution  in  the  General  Government 
demand  for  their  exercise  the  acquisition  of  lands  in 
all  the  States.  These  are  needed  for  forts,  arsenals, 
and  armories;  for  navy  yards  and  lighthouses,  for  cus- 
tomhouses, post  offices,  and  courthouses,  and  for  other 
public  uses.  If  the  right  to  acquire  property  for  such 
uses  may  be  made  a  barren  right  by  the  unwillingness 
of  property  holders  to  sell,  or  by  the  action  of  a  State 
prohibiting  a  sale  to  the  Federal  Government,  the  con- 
stitutional grants  of  power  may  be  rendered  nugatory, 
and  the  Government  is  dependent  for  its  practical  ex- 
istence upon  the  will  of  a  State,  or  even  upon  that  of 
a  private  citizen.     This  cannot  be." 

There  is  another  objection,  based  sometimes  upon 
expediency,  and  often  upon  constitutional  grounds, 
touching  the  authority  of  the  Government  to  use  the 
railroads  for  the  purposes  for  which  they  are  best 
adapted  after  their  acquisition  by  the  Government. 
In  other  words,  it  is  urged  that  the  Government  can- 
not, without  an  enlargement  of  its  powers  by  constitu- 
tional amendment,  engage  in  the  business  of  transpor- 
tation. The  first  fault  in  this  line  of  reasoning  is  an 
assumption,  contrary  to  the  fact,  that  the  business  of 
transportation  is  private;  and  the  second  is  a  miscon- 

319 


BOSS  ISM   AND    MONOPOLY 

stmction  of  the  clauses  of  the  Constitution  which  confer 
such  power  upon  Congress.  Transportation  falls  more 
fully  within  the  term  "  interstate  commerce,"  than 
any  operation  of  the  Government  which  is  not  strictly 
official.  Postal  service  is  not  required  by  every  citizen. 
Many  persons  seldom,  and  some  never,  send  or  receive 
a  letter  or  a  newspaper,  but  there  are  none  so  humble 
or  so  exalted  as  to  escape  the  tax  collected  by  rail- 
roads in  the  form  of  fares  and  freights. 

Every  time  government  ownership  is  mentioned, 
some  one,  whose  cranium  has  absorbed  the  false  teach- 
ings of  the  money  power,  takes  issue  on  the  ground  that 
it  is  a  step  in  the  direction  of  paternalism.  Sometimes 
the  term  socialism  is  used;  but  the  one  serves  his  pur- 
pose as  well  as  the  other,  which  is  solely  to  arouse 
political  or  class  prejudice.  Some  protest  because  they 
ignore,  or  do  not  understand,  the  true  nature  of  demo- 
cratic government ;  others  from  motives  of  real  or  sup- 
posed self-interest.  In  a  wide  sense,  paternalism  is  the 
essence  of  civil  government ;  and,  even  in  the  sense  of 
the  term  accepted  by  ultraconservatism  as  obnoxious, 
paternalism  is  an  important  and  indispensable  feature 
of  every  form  of  government  under  the  sun.  In  the 
conduct  of  the  post  office,  in  the  regulation  of  com- 
merce, in  the  public-school  system,  in  the  administration 
of  the  estates  of  decedents,  minors,  and  insolvents,  in 
the  care  of  the  insane,  in  the  administration  of  penal 
and  reformatory  institutions,  we  see  paternalism  applied 
to  individuals.  But  in  the  acquisition  and  operation  of 
railroads  and  other  means  of  transportation,  we  would 
see  the  governmental  power  exerted  for  the  common  weal 
without  reference  to  the  individuals  affected. 

Fortunately  for  the  people,  they  are  learning  not 
to  be  frightened  by  the  bugbear  of  socialism.  There 
are  comparatively  few  socialists  in  the  country,  and 
there  will  be  still  fewer  when  the  Government  is  restored 

320 


GOVERNMENT    OWNERSHIP 

to  truly  democratic  ideals.  During  a  recent  lecture 
course  at  Cooper  Union,  in  New  York,  it  was  noticed 
that  every  utterance  in  favor  of  public  ownership  of 
utilities  was  heartily  applauded.  Thereupon  it  was 
asserted  by  the  monopoly  press  that  the  audiences  were 
principally  socialistic.  So  at  one  of  the  meetings  a 
vote  was  taken.  Out  of  1,200  in  attendance,  it  was 
found  that  only  20  were  socialists.  And  then,  when 
all  who  believed  the  time  had  come  for  the  community 
to  assert  a  larger  control  over  public  enterprises  were 
requested  to  rise,  the  entire  audience  rose.  The  really 
dangerous  element  in  the  community  are  those  who 
sound  the  alarm  of  socialism  whenever  the  people  are 
endeavoring  to  get  back  their  own. 

Hon.  Thomas  M.  Patterson,  senator  from  Colo- 
rado, a  courageous  and  honest  man,  said  in  the  Senate, 
on  February  22,  1905:  "I  do  not  believe  that  a  great 
question  like  government  ownership  of  railroads  is  to 
be  put  down  by  an  epithet,  or  the  misapplication  of  a 
name,  or  the  misunderstanding  of  a  term.  Government 
ownership  has  been  magnified  into  a  bugaboo.  It  is 
not  socialism,  any  more  than  is  the  transportation  of 
mails  by  the  Government  of  the  United  States,  or  the 
transportation  of  packages  and  the  delivery  of  them 
to  the  owners  by  the  Government.  Our  Agricultural 
Department,  under  almost  every  test  that  can  be  ap- 
plied to  socialism — not  after  the  teachings  of  Karl 
Marx,  but  as  socialism  is  generally  understood  by  in- 
telligent people — is  nothing  less  than  a  great  govern- 
mental institution,  managed  and  controlled  in  the  spirit 
of  socialism."  Wholly  inconsistent  are  the  views  and 
attitude  of  those  who  contemplate  with  entire  com- 
placency the  insolence,  arrogance,  and  disregard  for 
law,  of  monopoly,  and  discover  socialism  and  ruin  in 
the  assertion  by  the  people  that  they  have  the  right  to 
exercise  the  constitutional  power  of  eminent  domain  to 

321 


BOSSISM    AND    MONOPOLY 

regain  their  own.  The  political  sage,  as  well  as  trust- 
controlled  organs  of  publicity,  that  are  to-day  con- 
demning the  doctrine  of  public  ownership  as  radicalism, 
were  a  few  years  ago  ridiculing  warnings  against  trust 
and  railroad  monopoly  as  mere  populistic  alarms,  and 
making  light  of  the  suggestion  that  these  might  be- 
come evils  of  national  magnitude.  The  newspaper  that 
to-day  took  that  view  would  soon  find  itself  without  a 
subscription  list.  The  do-nothing  apostles  decry  the 
plea  for  public  ownership  as  radicalism,  and  therefore 
untenable.  Let  it  then  be  called  radicalism.  Radical- 
ism is  to-day  the  voice  of  authority  not  only  in  politics, 
but  in  religion  and  philosophy.  The  only  aggravated 
and  pernicious  phase  of  paternalism  in  our  governments, 
national  and  State,  is  the  doctrine,  declared  by  the 
courts  and  recognized  by  legislative  bodies  and  execu- 
tive boards,  that  those  who  become  stockholders  in  rail- 
roads and  other  public-service  corporations,  and  buy 
their  bonds,  are  entitled  to  a  reasonable  return  upon 
their  investments,  regardless  of  the  wisdom  of  making 
the  investments,  and  regardless  of  the  question  whether 
construction  and  operation  have  been  economical  or  ex- 
travagant; regardless  of  the  question  whether  improve- 
ments and  extensions  were  necessary  and  timely  or 
ill-advised  and  premature;  also — and  here  is  the  nub 
of  the  whole  matter — regardless  of  whether  the  rate 
which  must  be  charged  to  insure  such  "  reasonable  re- 
turn "  is  reasonable  or  unreasonable.  Indeed,  the  bald 
and  false  assumption  of  the  major  premise  is  seen  here. 
The  question  of  a  reasonable  return  is  made  the  test 
of  a  reasonable  rate.  This  false  and  pernicious  doctrine 
has  become  firmly  annexed  to,  or  engrafted  upon,  our 
jurisprudence,  and  makes  the  entire  community  a  guar- 
antor of  a  particular  class  of  investors  against  loss. 
And  yet  the  beneficiaries  of  this  perversion  of  demo- 
cratic government  find  no  argument  against  government 

322 


GOVERNMENT    OWNERSHIP 

ownership  so  self-satisfying  and  effective  as  that  based 
upon  a  fear  of  paternaHsm. 

Really,  when  we  come  to  analyze  the  visible  mani- 
festations of  government,  we  shall  find  that  in  some 
sense  its  only  functions  are  paternalistic.  No  family 
can  be  kept  together  without  submission,  either  volun- 
tary or  involuntary,  of  all  its  members  to  a  central 
authority,  presumed  to  best  understand  and  to  be  best 
qualified  to  judge  of  the  common  as  well  as  the  indi- 
vidual wants  of  the  members.  What  more  or  different 
part  does  constitutional  government  perform.''  There 
was  a  time,  not  far  remote,  when  many  communities 
produced  and  consumed,  or  produced  and  trafficked,  in 
isolation  from  the  world.  But  to-day  a  temporary 
stoppage  of  all  trains  would  cause  annoyance  to  many ; 
a  general  interruption  of  communication  by  rail  for  ten 
days  would  result  in  widespread  distress  and  suffering. 
The  question  of  transportation  transcends  any  other  in 
importance  and  urgency. 

Among  the  enemies  of  government  ownership — in 
fact,  of  any  Federal  curb  whatever  on  monopoly — are 
the  sticklers  for  the  supposed  rights  of  the  States  under 
whose  laws  monopoly  corporations  are  incorporated. 
There  are  two  classes  of  States'-righters.  First,  those 
who  cling  to  the  State  as  a  sovereignty  superior  to  the 
National  Government,  as  a  matter  of  mere  sentiment  or 
pride.  These,  as  a  rule,  have  not  studied  any  consti- 
tutional bearings  of  the  question,  but  simply  and  stu- 
pidly stand  ready  and  willing  to  be  devoured  rather 
than  surrender,  possessed  of  a  narrow  ingrained  preju- 
dice, of  no  value  in  any  form  whatever.  Second,  the 
retained  lawyer,  standing  ready  to  grasp  at  anything 
to  bolster  up  the  weak  cause  of  monopoly  and  to  appeal 
to  the  political  States'-righters'  conceit.  It  may  be 
well  to  observe  that  the  latter  always  manage  to  reach 
the   conclusion   that  no  legislation   by   either    State   or 

323 


BOSS  ISM    AND    MONOPOLY 

Federal  sovereignty  is  needed,  and  that  all  tlie  com- 
plaints by  the  people  are  groundless.  Thus  one  of 
them,  after  having  himself  interviewed  for  publication 
about  the  date  of  the  passage  of  the  Townsend-Esch 
bill,  and  after  uttering  strong  States'  rights  sentiments, 
concluded  with  these  words:  "Looking  at  the  subject 
in  the  light  of  every  fact  which  I  have  been  able  to 
discover,  I  see  no  reason  why  there  should  be  any  legis- 
lation in  respect  to  this  question  of  aggregated  capi- 
tal." Another — also  particular  to  have  himself  written 
down  as  a  great  corporation  and  constitutional  lawyer — 
made  his  States'  rights  plea  at  great  length,  but  ap- 
plied to  the  proposed  Federal  legislation  the  terms 
"  imperialism  "  and  "  centralization."  He  wound  up 
his  interview  with  the  words,  "  I  do  not  believe  the 
safety  and  prosperity  of  this  country  can  be  insured 
by  any  particular  legislation."  It  may  be  noted  that 
all  those  defenders  of  monopoly  who  thus  have  them- 
selves interviewed  and  advertised — and  none  others  ap- 
pear to  have  the  privilege — deprecate  any  action  by 
the  Federal  Government  as  a  step  toward  the  central- 
ization of  power  in  the  National  Government,  but  are 
entirely  willing  that  that  Government  shall  be  swal- 
lowed up  or  nullified  by  Wall  Street.  They  never  apply 
to  the  latter  despotism  the  term  imperialism.  The  peo- 
ple should  just  now  welcome  a  degree  of  Federal  cen- 
tralization, at  least  to  the  extent  of  getting  rid  of  the 
railroad  and  trust  despotism  for  which  these  corpora- 
tion and  trust-fed  lawyers  stand.  It  is  observable  that 
they  are  simply  obstructionists.  They  are  ever  ready 
with  arguments  in  opposition ;  when  they  have  nothing 
better  they  become  rabid  democrats  of  the  old  school, 
and  harp  on  States'  rights;  but  they  are  careful  never 
to  suggest  a  remedy. 

For  the  purposes  of  government  ownership  of  rail- 
roads   Congress,    as    we    have    shown,    possesses    ample 

324 


GOVERNMENT    OWNERSHIP 

power ;  but  to  deal  with  the  "  Trusts,"  Congress  must 
be  given  more  power  by  an  amendment  of  the  Consti- 
tution. This  is  well  known  to  all  who  have  managed 
to  have  their  views  published  in  the  influential  press ; 
but  they  dare  not  enlighten  the  people  lest  they  off'end 
their  Wall  Street  retainers.  It  will  not  be  necessary  to 
require  corporations  to  surrender  their  charters  and  re- 
incorporate under  Federal  incorporation  law,  as  has 
been  proposed;  but  it  will  be  necessary  that  Congress 
be  given  such  plenary  power  over  interstate  commerce 
as  will  enable  it  to  make  the  fullest  investigations,  pun- 
ish corporations,  even  to  the  extent  of  nullifying  their 
State  charters  or  dissolving  them,  and  not  only  them,  but 
copartnerships  and  associations,  and  imprisoning  indi- 
viduals to  the  fullest  extent.  The  vital  interests  of  the 
people  can  be  no  longer  sacrificed  to  the  mere  sentiment 
or  fiction  of  States'  rights.  Sancho  de  Panza  was  a 
sage  and  philosopher  in  comparison  to  one  who  is 
willing  to  surrender  lands  and  home  and  financial  inde- 
pendence merely  to  preserve  the  shadowy  vestige  of 
States'  rights.  There  are  various  kinds  of  imperialism. 
A  little  of  the  right  kind  at  home  is  what  the  American 
people  most  need.  Twelve  amendments  to  the  Federal 
Constitution  had  been  made  before  a  States'  right  doc- 
trine was  ever  agitated.  It  had  its  origin  when  a 
disruption  of  the  Union  was  desired.  But  the  requisite 
amendment  for  ameliorating  present  conditions  means 
just  the  opposite  to  disruption  of  the  Union;  it  means 
its  preservation. 

The  most  plausible,  and  on  its  face  the  most  force- 
ful, argument  against  government  ownership  and  opera- 
tion is  a  dread  of  the  use  of  the  system  as  a  political 
machine  to  perpetuate  political  ascendency.  Without 
going  into  the  details  of  this  phase  of  the  question,  it 
may  be  well  suggested  that  the  whole  matter  rests  with 
the  people,   and  if  the  people   are  capable   of   accom- 

325 


BOSSISM   AND   MONOPOLY 

plishing  governmental  ownership,  they  are  capable  of 
providing  in  advance  an  antidote  to  this  evil.  But  it 
is  much  less  of  a  menace  than  it  is  supposed  to  be. 
There  are  by  far  more  men  employed  in  the  postal 
service  than  in  any  other  department  of  Government, 
and  yet  few  complaints  of  offensive  partisanship  have 
ever  been  directed  against  it.  The  corrupting  influence 
of  the  railroads  which  we  now  endure,  and  which  we 
would  under  government  ownership  escape,  is  a  stronger 
argument  in  favor  of  the  change  than  is  this  argument 
against  it.  How  can  we  expect  political  virtue  and 
courageous  independence  on  the  part  of  the  voter, 
young  or  old,  when  he  sees  every  avenue  to  promotion, 
or  even  to  the  expression  of  his  sentiments,  closed  unless 
he  is  willing  to  abjectly  crawl  into  the  good  graces  and 
political  service  of  a  corrupt  boss,  hired  and  paid  by 
a  soulless  and  criminal  corporation?  The  fear  of  a 
great  many  public  employees  acting  as  a  unit  at  elec- 
tions is  groundless.  The  civil-service-unit  system  natu- 
rally goes  with  public  ownership.  Now,  granting  that 
partisan  corruption  and  tyranny  have  made  great 
strides,  there  have  ever  been  well-established  and  insur- 
mountable limitations  to  their  power.  For  instance,  pub- 
lic opinion,  both  in  the  nation  and  in  cities,  so  strongly 
supports  the  civil-service  systems,  established  in  response 
to  a  popular  and  inexorable  demand,  that  neither  bosses, 
machines,  nor  corruption  agents  for  corporations  have 
ever  been  able  to  interfere  with  their  operation.  We 
find  under  the  Federal  Government  thousands  of  men 
who  obtained  employment  there  years  ago,  under  dif- 
fering party  administrations,  secure  in  their  places  and 
performing  their  duties  faithfully.  We  find  them  in 
the  post-office  department,  where  alone  they  number 
over  100,000.  We  find  them  in  every  department,  alto- 
gether several  hundred  thousand.  They  divide  polit- 
ically and  vote  as  they   please.      No  party   has   ever 

326 


GOVERNMENT    OWNERSHIP 

dared  attempt  coercion  with  those  under  the  civil-service 
rules,  and  any  such  attempt  would  result  disastrously 
to  the  party  that  tried  it.  Then,  in  most  cities,  civil- 
service  rules  are  in  force,  and  those  protected  by  them 
may  participate,  to  a  reasonable  extent  and  in  an 
orderly  way,  in  party  affairs  to  their  hearts'  desire, 
and  public  opinion,  irrespective  of  party  alignment, 
would  frown  down  any  attempt  to  interfere  with  them 
in  the  exercise  of  the  privilege,  as  it  would  if  an 
attempt  were  made  to  remove  a  civil-service  employee 
who  had  not  become  offensively  partisan. 

Every  capable  man  now  in  the  employ  of  the  rail- 
roads would  have  to  be  retained  in  his  position  when 
the  transfer  is  made  to  the  Government.  No  one  would 
think  of  perpetrating  the  unspeakable  folly  of  a  whole- 
sale discharge  of  experienced,  faithful  employees.  In 
the  nature  of  things,  they  could  not  be  thrown  out 
without  creating  chaotic  conditions  and  suspending  a 
public  service  upon  whose  continuance  public  conven- 
ience, and  in  some  instances  the  very  lives  of  the  peo- 
ple, depend.  These  would  all  go  into  service  of  the 
nation  with  their  party  predilections  and  rights;  but 
they  would  go  in  under  the  protecting  arm  of  civil 
service.  To  say  that  they  would  at  once,  or  at  any 
time,  become  the  mere  chattels  of  the  party  that  hap- 
pened to  be  in  power,  or  that  they  could  under  any 
circumstances  be  bunched  and  driven  hither  and  thither 
like  so  many  sheep  or  cattle,  is  to  insult  the  intelligence 
of  all  thoughtful  men  and  malign  a  class  who  are  among 
the  most  independent  and  courageous  of  citizens. 

Only  limited  space  is  available  for  the  discussion  of 
the  very  important  question  of  finance  involved  in  the 
process  of  taking  over  to  public  ownership  the  vast 
properties  devoted  to  railway  transportation.  On  Sep- 
tember 1,  1865,  the  Civil  War  had  swelled  the  public 
debt  to  $2,757,689,570,  which  was  the  highest  figure 
22  327 


BOSSISM    AND    MONOPOLY 

ever  attained.  On  account  of  the  war  there  were 
issued,  first  and  last,  twenty-eight  different  forms  of 
securities — some  as  bonds  having  a  long  time  to  run  and 
of  large  denomination,  and  some  as  Treasury  notes  of 
small  denomination,  to  mature  at  early  dates  or  pay- 
able on  demand.  When  gold  was  obtained  for  the 
former,  it  was  made  the  basis  for  large  issues  of  the 
latter.  As  no  specie  was  in  general  circulation,  these 
issues  of  small  denomination  circulated  from  hand  to 
hand,  practically  as  money,  side  by  side  with  aggregate 
issues  of  $715,420,031  in  legal-tender  notes  and  $562,- 
776,400  coin  certificates,  neither  of  which  bore  interest. 
The  eight  years  succeeding  the  war  were  years  of  un- 
paralleled prosperity  and  commercial  activity. 

The  foregoing  facts  and  figures  suggest  the  plain 
and  easy  road  to  financing  the  change  from  private  to 
government  ownership.  Let  the  Government  issue  long- 
time bonds  of  $1,000  each  for  the  larger  part  of  the 
indebtedness,  bearing  two  or  three  per  cent  interest ;  and 
certificates  of  indebtedness  in  small  denominations  for 
the  balance,  bearing  a  much  lower  rate  of  interest,  but 
enough  to  prevent  their  circulating  too  freely  as  money, 
and  yet  so  small  a  rate  that  they  will  be  used  as  sub- 
stitutes for  money  in  times  of  stringency — say  one  per 
cent.  The  Government  should  establish  a  sinking  fund 
for  the  redemption  of  the  bonds  of  large  denomination, 
to  be  maintained  out  of  railroad  earnings,  while  the 
certificates  should  only  be  redeemable  at  the  option  of 
the  Government,  except  that  a  certain  percentage  of 
them  should  be  accepted  each  year  in  payment  of  fares 
and  freights.  The  railroad  financing  should  not  be 
intermingled  with  the  general  finances  of  the  Govern- 
ment, but  should  be  kept  separate. 

There  need  be  no  trouble  in  floating  these  evidences 
of  indebtedness.  The  people  would  rapidly  absorb  the 
certificates.    The  bonds  now  held  against  railroad  prop- 

328 


GOVERNMENT    OWNERSHIP 

erties  need  not  be  redeemed  at  once.  Their  lien  would 
subsist  against  the  same  properties  as  at  present,  not- 
withstanding the  change  of  ownership,  and  could  be 
redeemed,  as  they  fell  due,  out  of  the  sinking  fund;  or, 
if  they  fell  due  too  rapidly,  they  could  be  redeemed 
from  the  sale  of  the  Government's  railroad  bonds.  If 
necessary,  in  order  to  prevent  a  breakdown  of  the  plan, 
the  Government  might  refund  some  of  the  outstanding 
railroad  bonds  at  the  same  rate  of  interest  that  they 
now  bear.  Very  few  of  them  bear  over  five  per  cent. 
Most  of  them  bear  four  per  cent  and  three  and  one- 
half,  and  some  even  as  low  as  three  per  cent.  Accord- 
ing to  the  United  States  Treasury  report  for  April, 
1905,  $543,000,000  of  the  public  debt  (nearly  one- 
third)  bears  only  two  per  cent  interest.  According  to 
the  latest  Controller's  report  the  average  market  quo- 
tation of  the  consols  representing  this  part  of  the  debt 
was,  in  1904,  at  a  premium  of  seven  per  cent.  There 
is  little  room  for  doubt  that  government  ownership 
could  be  financed  with  two-per-cent  bonds.  A  half  bil- 
lion or  more  dollars  in  certificates  of  small  denomination, 
bearing  no  interest,  would  pass  from  hand  to  hand  as 
money,  and,  of  course,  would  stand  at  par. 

The  improved  credit  of  the  United  States  is  shown 
in  a  strong  light  by  a  comparison  of  the  aggregates 
of  the  interest-bearing  debt  and  the  rate  of  interest  in 
1876  with  those  of  1902.  In  the  former  year  the 
interest-bearing  indebtedness  was  $1,710,685,450,  and 
the  annual  interest  charge  was  $96,104,269 — 5.6  per 
cent.  In  1902  the  interest-bearing  debt  was  $931,- 
070,340,  and  the  annual  charge  was  $27,542,945—2.9 
per  cent.  As  is  well  known,  the  Government  could  now 
float  bonds  at  two  per  cent  to  the  full  extent  of  its 
indebtedness  were  it  not  for  the  fact  that  the  premium 
on  all  of  it  above  two  per  cent  is  so  high  that  the 
Government    would    be    a    considerable    loser    by    pur- 

329 


BOSSISM    AND    MONOPOLY 

chasing   and   retiring   the   bonds    in    advance   of   their 
maturity. 

Some  are  found  to  oppose  the  Government's  incur- 
ring of  an  indebtedness  of  such  magnitude  as  will  be 
necessary  to  accomplish  the  transfer.  It  is  remarkable 
how  reluctant  people  are  to  do  great  things  in  a  col- 
lective capacity,  and  how  readily,  and  with  what  little 
thought  as  to  the  effect  and  meaning,  they  acquiesce 
in  the  same  things  when  done  by  individuals  and  private 
corporations.  Morgan,  Rockefeller,  and  a  few  others 
lay  their  hands  on  the  bond  and  stock  issues  of  the 
country  and  expand  them  to  the  extent  of  billions  of 
dollars  without  adding  a  dollar  to  the  nation's  wealth. 
Some  people  merely  marvel  at  the  audacity  and  mag- 
nitude of  the  operations,  but  give  no  thought  to  the 
fact  that  behind  it  is  a  scheme  to  greatly  increase 
transportation  and  other  monopoly  taxes  to  pay  new 
interest  and  dividend  charges.  But  the  same  people 
give  the  liveliest  kind  of  thought  to  a  proposition  to 
float  one-half  of  the  same  aggregate  of  Government 
indebtedness,  involving  a  much  lower  rate  of  transpor- 
tation and  monopoly  tax.  The  citizen  could  be  himself 
a  financier  with  reference  to  government  affairs  if  he 
would.  He  should  not  object  to  a  fiscal  operation  merely 
because  of  its  magnitude,  even  in  private  business. 
Suppose  some  one  should  come  to  a  business  man  of  only 
average  intelligence  and  shrewdness,  and  say  to  him: 
"  I  have  discovered,  within  ten  miles  of  New  York,  a 
bed  of  superior  anthracite  coal,  twenty  miles  square 
and  of  immeasurable  depth,  and  have  procured  a  good 
title.  Give  me  your  note  for  $100,000,000,  payable  in 
fifty  years  in  fifty  equal  installments  of  $2,000,000 
each,  interest  at  five  per  cent,  secured  on  the  property, 
and  I  will  convey  my  title  to  you."  If  these  statements 
were  verified,  he  would  not  think  of  being  deterred  from 
accepting  so  profitable  an  offer  by  the  magnitude  of 

330 


GOVERNMENT    OWNERSHIP 

the  indebtedness  he  was  asked  to  incur.  He  would  find 
the  debt  and  the  interest  charge  a  very  hght  burden 
and  realize  a  very  large  margin  of  profit  at  the  end  of 
each  year's  developments. 

Mr.  Bryan,  speaking  of  this  question  at  the  Jeffer- 
son Club  banquet,  at  Chicago,  in  April,  1905,  said: 
"  The  third  Jeffersonian  doctrine  that  is  now  being 
misinterpreted  and  misapplied  is  his  argument  against 
long-time  debts.  He  took  the  position  that  the  earth 
belonged  in  succession  to  each  generation,  and  that  the 
preceding  generation  had  no  right  to  mortgage  the 
earth  beyond  its  occupancy  of  it.  If  this  doctrine  had 
been  adopted  it  would  have  been  much  easier  to  deal 
with  the  problems  of  to-day,  but  it  is  manifestly  unfair 
to  permit  railroads  and  municipal  supply  companies  to 
mortgage  the  public  for  generations,  and  then  to  quote 
Jefferson  against  the  issue  of  bonds  when  a  city  attempts 
to  rid  itself  of  its  private  monopolies.  It  is  better  for 
a  city  to  issue  bonds  at  a  low  rate  of  interest  and  for 
actual  improvements,  than  for  a  city  to  permit  private 
corporations  to  issue  bonds,  based  not  upon  investments, 
but  upon  the  power  of  monopoly  to  extort  an  income 
from  succeeding  generations.  Then,  too,  there  is  a 
very  clear  distinction  between  a  debt  incurred  in  the 
establishment  of  a  municipal  plan  which  will  yield  an 
income  to  the  city  and  the  incurring  of  a  debt  which 
yields  no  specific  return.  Jefferson  had  in  mind  a  pub- 
lic indebtedness  incurred  for  something  which  yielded 
no  return,  and  properly  viewed  it  as  a  curse  rather 
than  a  blessing  when  bequeathed  to  posterity.  But  his 
views  as  to  such  an  indebtedness  have  no  relevancy  to  a 
large  indebtedness  carried  by  a  city  or  general  govern- 
ment, if  the  money  borrowed  is  expended  on  a  plant 
which  not  only  pays  interest  upon  the  investment,  but 
creates  a  sinking  fund  sufficient  to  discharge  the  in- 
debtedness in  a  reasonable  time,  and  thus  leave  to  future 

331 


BOSSISM    AND    MONOPOLY 

generations  the  property  unencumbered."  In  this  way, 
within  a  single  Mfetime,  a  free  title  to  all  public  service, 
municipal  plants,  and  to  interstate  railways  could  be 
acquired  by  the  people  of  the  United  States  and  trans- 
mitted to  the  next  generation,  which  could  greatly 
reduce  rates  and  still  realize  a  profit  sufficient  to  entirely 
relieve  them  of  taxation.  That  the  Federal  Govern- 
ment has  the  ability  to  do  so — that  is,  that  it  can 
obtain  sufficient  credit  for  the  purpose,  and  that  at 
very  low  rates  of  interest — no  one  who  understands  the 
philosophy  and  methods  of  high  finance  can  dispute. 
Despite  the  fact  that  great  progress  has  been  made  by 
trusts,  and  especially  by  the  Railroad  Trust  and  one 
or  two  others,  in  getting  control  of  natural  resources, 
our  argument  has  shown  that  government  ownership 
will  effect  a  release  of  many  that  have  been  acquired 
and  give  free  access  to  those  still  under  independent 
ownership. 

But,  addressing  ourselves  to  those  who  hesitate  and 
entertain  fears  when  they  contemplate  the  magnitude 
of  the  liability  we  urge  the  Government  to  assume,  we 
call  attention  to  past  and  prospective  sources  of  wealth 
and  prosperity  of  the  country  as  proof  that  such  bur- 
den will  be  lightly  borne,  even  if  it  be  a  burden  at  all, 
which  we  elsewhere  show  it  will  not  be.  Note  the  mar- 
velous increase  in  the  nation's  wealth  during  the  last 
century.  The  population  of  5,300,000,  at  its  begin- 
ning, increased  to  76,300,000,  and  our  wealth  increased 
in  a  much  greater  proportion,  no  accurate  statement 
of  it  being  possible,  though  it  was  estimated,  in  1904, 
that  it  had  reached  the  $100,000,000,000  mark.  As 
for  the  future,  Mr.  Henry  C.  Nicholas,  a  well-known 
authority,  writing  in  Public  Opinion,  in  May,  1905, 
says :  "  The  Louisiana  territory  alone  has  875,025 
square  miles,  which  is  only  slightly  loss  than  that  of 
the  United  Kingdom,  Netherlands,  Belgium,  Germany, 

332 


GOVERNMENT    OWNERSHIP 

France,  Spain,  Italy,  and  Switzerland,  whose  total  area 
is  888,978.  These  countries  have  a  present  population 
of  205,000,000,  as  against  about  15,000,000  in  the 
Louisiana  territory.  The  agricultural  and  mineral 
wealth  of  the  Louisiana  territory  would  unquestionably 
sustain  a  population  of  200,000,000  people.  And  the 
Louisiana  territory,  as  far  as  area  is  concerned,  forms 
only  about  one-third  of  the  United  States.  With  as 
dense  a  population  as  Europe  possesses,  the  United 
States  would  have  a  population  of  about  600,000,000 
people.  There  is  clearly  ample  room  in  this  country 
for  a  tremendous  increase  in  population,  and  that  the 
twentieth  century  will  witness  such  an  increase  is  one 
of  the  certainties  of  the  future.  No  other  country  on 
the  face  of  the  globe  possesses  such  inexhaustible  natural 
resources  or  such  marvelous  fertility  of  soil.  A  strong 
reason  for  believing  that  the  industrial  progress  of  the 
United  States  in  the  future  will  be  even  more  remark- 
able than  in  the  past  is  the  fact  that  the  present  cen- 
tury opened  under  the  most  promising  conditions,  and 
the  problems  confronting  the  nation,  while  many  of 
them  are  of  the  greatest  importance  to  the  continuance 
of  our  prosperity  and  progress,  are  not  of  a  nature 
to  strike  at  our  very  existence,  such  as  those  which 
the  country  was  called  upon  to  solve  during  the  last 
century." 

How  much  greater  would  our  wealth  have  been  and 
how  much  brighter  would  appear  our  country's  pros- 
pects if,  when  the  importance  of  the  transportation 
problem  was  first  seen,  our  Government  had  instituted 
public  for  private  ownership  of  railroads.  And  it  is 
of  the  utmost  importance  that  the  duty  should  be  no 
longer  delayed.  The  two  hundred  thousand  miles  of 
railroad  which  we  now  have  will  probably  have  increased 
during  the  present  century  to  one  million,  and  the  in- 
flating of  private  capitalization  will  go  on  along  the 

333 


BOSSISM    AND    MONOPOLY 

same  lines  as  at  the  present,  upon  an  ever-expanding 
scale,  all  the  evils  of  present  management  continuing  in 
more  and  more  aggravated  form.  Election  between 
emancipation  of  the  Republic  by  the  acquisition  of  the 
means  of  transportation  on  the  one  hand,  and  railroad 
tyranny  on  the  other,  will  remain  the  issue  until  it  is 
settled,  and  settled  right.  The  people  will  have  to 
decide  between  these  alternatives  sooner  or  later.  Why 
not  now.? 

The  people  of  the  several  States  and  of  the  United 
States  should  now  have  learned  to  do  big  things  in  a 
great  way  in  their  collective  capacity.  As  matters  now 
stand,  the  people  avail  themselves  of  the  advantages  of 
public  utilities  on  a  petty  scale.  Not  so  with  the  cor- 
porations. The  Southern  Pacific  Company  did  not  hesi- 
tate recently  to  issue  $160,000,000  of  three  and  one- 
half  per  cent  fifty-year  bonds.  That  vast  indebtedness 
is  just  as  much  a  mortgage  upon  the  people  of  Cali- 
fornia, Arizona,  Texas,  Louisiana,  Nevada,  and  Utah, 
which  its  lines  traverse,  and  upon  an  indefinite  number 
in  other  States  and  Territories,  and  the  annual  interest 
and  sinking  fund  are  just  as  much  a  tax  charge  to  be 
collected  from  the  public,  as  if  bills  were  made  out  and 
collected  through  State  and  county  officers,  as  other 
taxes  are  collected.  The  amounts  of  the  tax  will  not 
be  calculated  by  those  who  pay  it,  but  will  be  carefully 
estimated  and  added  to  fares  and  freight  bills  by  the 
railroad  company.  Those  States  could  construct  and 
own  a  better  system  for  one-third  that  amount,  perhaps 
less,  but  would  refuse  to  assume  an  indebtedness  of  even 
$50,000,000  for  the  purpose.  They  give  but  a  pass- 
ing thought  to  the  fact  that  one  only  of  the  several 
railroad  companies  doing  business  within  their  borders 
has  encumbered  their  property,  profits,  and  earnings 
with  more  than  three  times  that  amount.  A  habit  of 
thinking  along  these  lines  is  most  to  be  desired  at  this 


GOVERNMENT    OWNERSHIP 

time.  After  the  people  have  thought  on  these  subjects 
a  Httle  time  they  will  soon  follow  thought  with  action. 
That  is  the  one  thing,  in  fact  the  only  thing,  that 
the  bosses  and  monopolists  fear,  real  earnest  political 
thought  and  action.  Neither  publicity  nor  protest  are 
of  any  avail,  but  concerted  political  movements  among 
the  people  strike  terror  to  the  hearts  of  these  self- 
created  taxgatherers. 

The  lack  of  space  forbids  any  extended  discussion 
of  the  rights,  equities,  and  relations  of  stockholders 
involved  in  questions  of  public  ownership.  It  may  be 
suggested,  however,  generally,  that  the  possibility  that 
sovereignty  will  assert  itself,  and  that  its  assertion  may 
result  in  private  loss,  the  investors  in  such  securities 
have  always  before  them.  To  them  the  maxim,  Caveat 
emptor,  clearly  applies. 

The  prices  at  which  the  railroad  stocks  are  now 
quoted  upon  the  exchanges  of  the  country  represent  in  a 
very  small  degree  intrinsic  value.  They  represent,  almost 
entirely,  income-producing  power,  present  or  prospective, 
incident  to  the  control  which  their  possession  signifies. 
The  total  outstanding  issues  of  stocks,  as  given  by  the 
Interstate  Commerce  Commission  of  1902,  aggregated 
$5,806,566,204,  and  subsequent  issues  would  bring  the 
total  to  about  $6,000,000,000.  If  in  the  acquisition 
plan  the  Government  paid  fifty  per  cent  of  face  value, 
$3,000,000,000,  this  added  to  the  cost  of  railroads  would 
bring  the  total  up  to  $7,000,000,000.  Holding  the  same 
property  with  its  vast  earning  power,  and  offering  ir 
addition  the  entire  wealth  of  the  nation  as  security, 
the  Government  would  float  that  amount  of  indebtedness 
in  bonds,  or  certificates  of  indebtedness  of  small  de- 
nomination, among  our  own  people  at  a  low  rate  of 
interest.  Even  if  the  rate  were  three  per  cent,  the 
annual  charge  would  be  but  $210,000,000.  Compare 
this  with  $885,000,000  which  the  people  paid  in  1902, 

335 


BOSSISM    AND    MONOPOLY 

less  $51,000,000  taxes,  or  net  $834,000,000,  and  we 
begin  to  see  the  proportions  of  the  financial  balance  in 
favor  of  Government  over  private  ownership.  Enough 
money  is  thus  collected  each  year  as  profits  by  rail- 
road owners,  over  and  above  what  it  would  cost  the 
people  to  pay  interest  on  the  indebtedness  incurred  in 
their  acquisition,  to  pay  ordinary  running  expenses  of 
the  United  States  Government  one  year.  Thus  far  we 
have  not  mentioned  the  gross  collections  (called  earn- 
ings) of  the  railroads.  They  aggregated,  in  1902, 
$1,711,754,200  and  now  amount  to  $2,000,000,000. 
If  the  expenditures  (operating  expenses,  interest,  and 
dividends)  were  made  broadcast  among  the  people,  or 
made  in  such  a  way  that  they  would  be  redistributed 
among  all  classes,  then  extravagance  or  even  illegitimate 
disbursements  by  railroad  managers  would  be  com- 
paratively slight  cause  for  complaint  by  the  community 
at  large.  But  each  company  maintains  a  large  staff 
of  head  men,  under  various  designations,  and  pays  to 
each  a  princely  salary;  each  company  sets  apart  and 
expends  a  large  "  contingent  "  fund,  ostensibly  for  "  po- 
litical protection,"  but  really  to  be  used  for  the  de- 
basement of  the  people  and  their  representatives ;  each 
company  carries  free,  at  the  expense  of  those  who  pay, 
a  large  number  of  persons — all  whose  favor  and  in- 
fluence in  any  department  of  government.  Federal  or 
State,  is  considered  of  value.  These  are  but  a  few 
items  of  illegitimate  expenditure  made  before  the  bal- 
ance is  struck  to  ascertain  the  sum  to  be  appropriated 
in  the  form  of  interest  and  dividends.  Of  course  it  is 
impossible  to  state  with  any  certainty  its  amount,  but 
undoubtedly  it  runs  into  the  millions,  and  it  is  all 
taken  by  the  inexorable  hand  of  monopoly  from  the 
people.  Most  of  it  would  be  saved  if  the  Government 
owned  the  roads. 

Ex-Senator  Chandler  clearly  sees  the  superior  ad- 
336 


GOVERNMENT    OWNERSHIP 

vantages  to  the  public,  and  from  a  financial  standpoint, 
of  government  ownership  over  the  present  system. 
Commenting  on  the  proposed  rate  bills  before  Congress, 
he  said :  "  If  the  Government  should  acquire  the  rail- 
roads for  $8,000,000,000,  it  could  borrow  the  money 
at  three  per  cent,  and  the  tax  on  the  public  would  be 
only  $240,000,000,  as  against  five  per  cent  on  $12,000,- 
000,000,  namely,  $600,000,000." 

Much  has  been  already  said  on  the  subject  of  ex- 
orbitant rates  and  the  reasons  therefor.  But  it  will  not 
be  amiss  to  repeat  here  that  freights  and  fares  should 
be  a  great  deal  lower  than  they  are  at  present.  That 
the  interest  charges  upon  fixed  capital  are  double  or 
treble  what  they  should  be,  as  compared  with  other 
forms  of  investment,  has  already  been  fully  shown. 
The  comparison  there  made  ignores  the  much  lower 
rate  of  interest  at  which  the  Government  could  float 
the  railroad  indebtedness  in  the  case  of  government 
ownership.  That  would,  of  itself,  be  a  very  important 
item   in  its   favor. 

There  can  be  no  stronger  argument  than  the  re- 
sults of  experience  in  countries  where  the  Government 
either  owns,  or  absolutely  controls,  the  railroads  through 
partial  ownership.  For  the  following  summary  the 
author  is  indebted  to  The  Altrurian: 

"  In  Austraha  you  can  ride  a  distance  of  1,000  miles 
across  the  country  for  $6.50,  first-class,  too,  while  work- 
ingmen  can  ride  six  miles  for  two  cents,  twelve  miles 
for  four  cents,  etc.,  and  railroad  men  receive  twenty-five 
to  thirty  per  cent  more  wages  for  eight  hours  of  labor 
than  they  are  paid  in  this  country  for  ten  hours  of 
toil.  In  Victoria,  where  the  above  rates  prevail,  the 
net  income  from  the  roads  last  year  was  sufficient  to  pay 
all  the  federal  taxes.  In  Hungary,  where  the  roads 
are  state  owned,  you  can  ride  six  miles  for  one  cent, 
and  since  the  Government  bought  the  roads  wages  have 

337 


BOSS  ISM    AND    MONOPOLY 

doubled.  Belgium  tells  the  same  story — fares  and 
freights  cut  down  one-half  and  wages  doubled.  Yet 
the  roads  pay  a  yearly  revenue  to  the  Government  of 
$4,000,000.  In  Germany  you  can  ride  four  miles  for 
one  cent  on  the  government-owned  lines.  Yet  wages 
are  over  a  hundred  and  twenty  per  cent  higher  than  they 
were  when  the  private  corporations  owned  them,  and 
during  the  last  ten  years  the  net  profits  have  increased 
forty-one  per  cent.  Last  year  the  roads  paid  the  Ger- 
man Government  a  net  profit  of  $25,000,000." 

In  the  matter  of  owning  and  operating  means  of 
transportation  in  the  nation  at  large,  as  well  as  within 
cities,  many  suppose  that  we  lead  the  world  and  are 
"  up  to  date  " ;  but,  in  fact,  we  are  a  half  century 
behind  the  times.  In  other  countries,  especially  in  the 
most  enlightened  and  progressive,  the  people  have  found 
in  government  ownership  a  remedy  for  strikes,  rebates, 
discriminations,  and  exorbitant  charges;  here  we  have 
found  none.  Abroad,  public  service,  and  not  profit,  after 
cost  of  management  and  repairs  are  paid,  is  the  aim ; 
here,  under  private  control,  profit  and  not  public  ser- 
vice is  the  principal  incentive.  But  the  power  to  fix 
and  maintain  a  dead  level  of  rates  for  a  commodity 
of  general  necessity,  and  to  compel  all  to  pay  them,  is 
not  the  power  to  do  private  business,  but  to  govern  and 
exercise  the  power  of  taxation,  functions  which  should 
never  be  intrusted  to  private  hands.  If  bestowed  upon 
individuals  and  corporations  it  is  so  much  power  sub- 
tracted from  that  which  belongs  to  the  people  at  large, 
nor  is  there  any  good  reason  for  it.  It  can  only  be 
explained  by  conceding  the  willingness  of  a  majority 
to  license  robbery  and  extortion  of  themselves  by  the 
few. 

The  rapacity  of  the  trusts  can  be  checked  and  busi- 
ness restored  to  normal  channels  in  but  one  way,  and 
that  is  for  the  Government  to  acquire  the  means  of 

338 


GOVERNMENT    OWNERSHIP 

transportation,  and  then  fix  rates  so  that  the  short 
haul  shall  pay  proportionally  the  same  as  the  long 
and  no  more.  A  packing  house,  or  an  oil  refinery,  or 
a  tobacco  factory,  for  instance,  near  the  place  of  pro- 
duction— near  the  crude  or  raw  material — could  not 
then  be  destroyed  by  the  competition  of  a  trust  a  thou- 
sand or  even  five  hundred  miles  away,  no  matter  how 
great  the  latter's  capitalization.  Government  owner- 
ship of  public  utilities  has  become  necessary  in  the  proc- 
ess of  industrial  evolution.  It  is  logically  necessitated 
by  the  trustification  of  manufactures  and  consolidation 
of  the  means  of  transportation. 

Rate  regulation  differs  from  unlimited  power  of  rate- 
making,  such  as  would  be  exercised  under  government 
ownership,  and  such,  we  insist,  could  not  be  exercised 
under  the  system  of  private  ownership,  in  this,  that 
rates  cannot  be  prohibited  to  an  extent  that  will  leave 
the  owner  without  some  profit  upon  the  investment,  which 
the  courts  tell  us  is  a  reasonable  profit;  whereas,  if  the 
Government  owned  the  roads,  so  that  the  Government 
could  arbitrarily  make  rates,  a  rate  might  be  fixed, 
either  upon  a  particular  line  or  upon  all  lines,  so  as  to 
temporarily  work  a  loss  in  operation,  if  circumstances 
should  require  it.  Under  government  ownership,  condi- 
tions can  be  easily  imagined  which  would  justify  the 
Government,  temporarily,  in  operating  some  or  all  rail- 
roads at  a  loss,  just  as  a  loss  may  sometimes  occur  in 
a  branch  or  in  the  entire  department  of  postal  service. 
But  the  making  or  fixing  of  a  rate  which  will  fall  short 
of  yielding  a  profit  would  amount,  under  the  private- 
ownership  system,  to  the  taking  of  property  not  only 
without  due  process  of  law,  but  without  compensation ; 
that  is  to  say,  to  a  confiscation  of  it.  We  have  else- 
where shown  how  some  of  the  great  industrial  monop- 
olies were  created  and  are  maintainable  only  by  reason  of 
the  advantages  given  them  in  transportation.     It  will 

339 


BOSSISM    AND    MONOPOLY 

be  seen  that  the  remedies  at  present  mostly  discussed 
call  for  the  enactment  of  laws  that  would  be  essentially 
and  strictly  special;  and  we  here  suggest  that,  if  it  be 
permissible  at  all  to  resort  to  specially  planned  and 
directed  attacks  upon  such  monopolies  in  order  to  get 
rid  of  them,  no  scheme  of  that  character  could  be  nearly 
so  effective  or  open  to  so  few  objections  as  that  of  so 
adjusting  freight  tariffs  under  government  ownership  as 
to  encourage  and  build  up  industries  in  competition  to 
the  so-called  trusts.  That  would,  it  is  true,  be  amenable 
to  the  objection  that  the  Government  as  a  common  car- 
rier— and,  indeed,  in  all  its  relations — should  accord  to 
all  equal  treatment,  whether  rich  or  poor,  whether  ex- 
isting as  corporations  or  natural  persons;  but  it  would 
be  no  more  objectionable  from  the  standpoint  of  general 
democratic  principle  than  the  other  remedies  proposed, 
and  would  be  exempt  from  constitutional  objection.  The 
Government  gives  to  some  parts  of  the  country  better 
mail  service  than  it  gives  to  others,  nor  has  its  consti- 
tutional right  to  do  so  ever  been  called  in  question.  It 
appropriates  millions  of  dollars  to  improve  certain  rivers 
and  harbors  adjacent  to  certain  cities,  and  maintains 
forts,  arsenals,  and  furnishes  naval  protection  at  cer- 
tain points,  leaving  others  unprotected.  No  one  criti- 
cises these  appropriations  from  a  constitutional  stand- 
point. Likewise,  the  Government  might,  by  providing 
a  rate  of  transportation  less  than  the  general  rate,  aid, 
for  instance,  the  independent  oil  producers  and  refiners 
of  Kansas,  California,  Pennsylvania,  and  other  States, 
and  thus  destroy  the  monopoly  advantage  of  the  Stand- 
ard Oil.  It  might  in  the  same  way  develop  the  beet- 
sugar  industry  in  various  sections  and  deprive  the  sugar 
trust  of  its  monopoly.  Other  illustrations  could  be  given. 
In  Governor  La  Follette's  plea  for  vesting  a  rate- 
making  power  in  a  commission,  he  advances  arguments 
strongly  suggestive  of  the  superior  expediency  of  gov- 

340 


GOVERNMENT    OWNERSHIP 

ernment  o^Tiership.  For  instance :  "  The  Federal  Gov- 
ernment is  great  and  powerful.  It  can  secure  the  ser- 
vices of  competent  men.  It  can  employ  as  many  as 
may  be  required  to  protect  the  interests  of  the  business 
and  the  people  of  the  country."  The  appliances  of 
railroad  operation  are  relatively  simple.  In  all  things, 
until  we  reach  the  financing  department,  we  may  prop- 
erly designate  railroad  operation  as  a  simple  science, 
largely  a  matter  of  uniform  routine,  there  being  little 
difficulty  in  filling  the  most  important  positions.  Under 
government  ownership  there  would  be  a  permanency  of 
employment  conditioned  only  upon  good  behavior  and 
faithful  service,  and  the  aggregate  rewards  would  be 
more  than  at  present,  though  the  rates  charged  would 
be  lower.  Hours  of  labor  would  be  shorter  and  better 
regulated  and  the  employment  in  every  way  more  satis- 
factory. Much  of  the  trouble  between  the  railroads 
and  their  employees  arises  from  discontent  of  the  latter 
with  their  condition  and  remuneration  when  compared 
with  that  of  the  owners  and  chief  officers.  There  might 
be  discontent  under  government  ownership,  but  there 
would  be  no  strikes,  lockouts,  or  riots.  Such  occurrences 
are  unknown  under  the  postal  service.  In  these  days 
of  trusts  and  consolidations,  strikes  and  cut-downs  be- 
tween labor  and  railroads,  it  may  be  interesting  to  note 
what  has  been  and  can  be  done  to  remedy  these  evils. 
We  never  hear  of  any  strikes,  cut-downs,  or  labor 
troubles  on  the  railroads  in  countries  where  they  are 
owned  by  governments;  and  why.?  Because  the  gov- 
ernments own  and  operate  them  in  the  interest  of  all 
the  people. 

The  legislation  and  procedure  necessary  to  inaugu- 
rate government  ownership  need  not  be  at  all  tedious 
or  complicated.  Constitutional  power  is  not  lacking. 
In  brief,  the  steps  would  be  about  as  follows:  An  Act 
of  Congress  would  be  passed  declaring  the  Government's 

341 


BOSSISM   AND    MONOPOLY 

purpose  and  policy,  and  authorizing  the  appointment 
by  the  President  of  a  board  of  appraisement.  The  act 
should  designate,  either  by  name  or  by  class,  the  roads 
to  be  first  appraised — for  instance,  all  transcontinental 
roads,  all  trunk  lines,  or  all  interstate  lines,  in  their 
order.  The  act  should  prescribe  principles  to  govern 
in  fixing  values  for  purposes  of  appropriation  to  the 
public  use.  Thus,  it  might,  and  should,  instruct  the 
commission  to  reject  any  value  based  upon  monopoly 
advantage,  and  for  that  reason  it  should  also  ignore 
market  quotations  of  stocks.  Where  money  has  been 
actually  advanced  by  bondholders  and  invested  in  the 
property,  such  bonded  indebtedness  should  be  counted 
as  value,  provided  the  reproduction  of  the  same  prop- 
erty on  the  same  route  would  cost  at  least  an  equal  sum. 
The  value,  calculated  upon  the  basis  of  cost  of  repro- 
duction in  excess  of  bonded  indebtedness,  should  be 
awarded  to  the  stockholders.  Or  a  different  rule,  more 
favorable  to  the  stockholders,  might  be  prescribed.  The 
entire  bona  fide  bonded  indebtedness  might  be  counted 
as  value,  dollar  for  dollar,  as  well  as  the  average  mar- 
ket price  of  each  stock,  say  for  twenty  years  past, 
might  be  added.  Other  methods  could  be  suggested. 
The  board  of  appraisers  having  reported  to  the  Presi- 
dent, the  Secretary  of  the  Treasury  should  be  directed, 
by  suitable  legislation,  to  act  upon  the  report  by  issuing, 
and  exchanging  or  marketing,  the  prescribed  evidences 
of  public  indebtedness.  Of  course,  any  railroad  corpo- 
rations not  accepting  the  findings  of  the  board  should 
be  permitted  to  appeal  to  the  courts. 

Appraisers  may  be  appointed  to  fix  and  assess  the 
values  of  all  assets,  and  the  value  so  fixed  may  be  ten- 
dered. Bonds  or  other  evidences  of  public  indebtedness 
will  be  issued  and  tendered ;  and  if  these  be  not  accept- 
able, they  will  be  sold  and  the  money  tendered.  Nor 
will  the  Government  find  it  necessary  to  go  to  Wall 

342 


GOVERNMENT    OWNERSHIP 

Street  syndicates  to  raise  the  money.  Certificates  of 
indebtedness,  secured  upon  the  properties  and  the  pledge 
of  their  earnings,  will  be  offered  to  the  people,  and  will 
be  gladly  taken.  If  the  rate  of  interest  be  higher  than 
now  paid  to  the  holders  of  government  bonds,  the  prices 
of  the  services  and  commodities  supplied  by  the  utilities 
will  bear  the  increase,  and  still  be  less  than  at  present, 
and  will  constantly  decrease  as  the  indebtedness  is  ex- 
tinguished. 

Whether  aware  of  it  or  not,  all  classes  are  vitally 
interested  in  the  solution  of  the  transportation  prob- 
lem. The  combined  bondholding,  stockholding,  and 
financial  interest  has  already  diverted  into  its  coffers 
most  of  the  net  earnings  of  the  people.  This  has  been 
accomplished  so  quietly  and  skillfully  that  a  majority 
of  the  sufferers  are  unconscious  of  the  cause  of  distress. 
They  have  been  taught  by  politicians  and  newspapers 
and  other  paid  agents  of  the  bondholding  interest  to 
attribute  it  to  high  tariff,  to  exportation  of  gold,  to 
overproduction,  to  expansion  of  credit,  to  an  overex- 
cited imagination,  etc.  While  some  of  these  are  phe- 
nomena, they  are  none  of  them  real  causes.  Most  of 
them  are  but  symptoms.  The  disease  lies  deeper.  Our 
grievances  are  the  offspring  of  acquiescence  or  actual 
connivance  of  the  constituted  powets  with  other  powers 
so  great  that  they  ask  to  be  "  let  alone."  They  are 
able  to  take  care  not  only  of  themselves  but  of  the 
whole  country,  if  allowed  to  do  so  in  their  way.  "  Peace, 
conservatism,  and  safe  policies  "  is  what  they  require. 
A  complete  understanding  among  themselves — that  is, 
combination — will  work  out  prosperity,  according  to 
their  definition  of  the  term.  Pleaders  for  abject  con- 
servatism have  ever  been  either  open  enemies  of  their 
country  or  stumbling-blocks  in  the  way  of  its  progress. 
The  slaveowners  and  their  Northern  allies  were  con- 
servatives. So  were  those  who  loaned  greenbacks  to  the 
23  343 


BOSS  ISM    AND    MONOPOLY 

Government  and  afterwards  exacted  gold.  The  Tones 
of  the  Revolutionary  era  were  conservatives  who  could 
tolerate  no  change  or  deviation  from  the  beaten  path 
into  new  paths. 

Every  merchant,  every  farmer,  every  wage-earner, 
every  tradesman,  and  every  manufacturer  not  a  party 
to  a  trust  agreement  is  engaged  in  the  fierce  strife  of 
competition  with  every  other  in  the  world.  In  the  field 
of  business  and  industry  new  machines  are  invented 
and  new  processes  discovered  and  employed  as  weapons 
against  rivals.  All  tendencies  are  toward  cheapness, 
and  there  has  been  an  immense  decrease  in  prices  in  the 
last  few  years.  This  applies  to  products  of  the  farmer 
and  to  those  of  manufacture,  except  where,  in  the  case 
of  the  latter,  the  tendency  has  been  temporarily  checked 
by  trust  agreement.  But  competition,  which  was  once 
so  rife  between  rival  lines  of  railroad  and  resulted  in  a 
considerable  reduction  of  rates  and  fares,  is  no  longer 
operative.  "  Community-of -interest  "  agreements  have 
suspended  operation  of  natural  laws,  and  by  reason  of 
these  the  railroad  interest  holds  that  advantage  which 
only  a  complete  monopoly  can  give.  As  William  J. 
Bryan  has  well  said :  "  A  private  monopoly,  such  as 
public  ownership  is  intended  to  prevent,  does  not  enlarge 
the  sphere  of  the  individual  or  inspire  him  to  high  en- 
deavor. The  actual  effect  of  a  private  monopoly  is 
just  the  reverse,  and  wherever  the  principle  of  private 
monopoly  enters,  the  Government  must  operate  the  mo- 
nopoly or  violate  all  the  principles  taught  by  Jefferson." 

There  is  a  mighty  influence  in  the  United  States 
hostile  to  governmental  activity  in  any  matter  not  per- 
taining to  good  order,  poHce  regulation,  and  general 
commerce.  On  the  side  of  the  let-alone  policy  we  find 
arrayed  most  of  the  professional  politicians  and  office- 
holders, many  newspapers  and  writers  on  economic  sub- 
jects,   and    practically    all    large    owners    of    railroad 

344f 


GOVERNMENT    OWNERSHIP 

capital.  But  the  enlightened,  voiceless  multitude,  the 
taxpayers,  farmers,  wage-earners,  and  business  men,  of 
small  capital,  if  given  an  opportunity  at  the  ballot  box, 
with  partisan  prejudice  allayed,  would  settle  the  ques- 
tion in  short  order  favorably  to  government  ownership. 
Party  politicians,  even  when  not  corrupted  by  this  rail- 
road and  moneyed  interest,  are  timidly  conservative. 
They  fear  to  advocate  anything  of  a  radical  tenor,  lest 
it  turn  out  to  have  been  a  mistake  and  result  in  party 
ostracism.  Newspapers,  as  a  rule,  are  influenced  in  the 
same  way  when  not  subsidized,  as  many  of  them  are. 
Economic  writers  who  depend  upon  the  periodicals  as 
mediums  of  expression  and  sources  of  revenue,  if  dis- 
posed to  take  popular  ground  on  this  and  kindred  ques- 
tions, find  it  impossible  to  secure  publicity.  But  public 
opinion  must  and  will  find  expression;  the  wrongs  and 
abuses  of  long  standing  will  in  some  way  find  redress. 
The  present  strained  conditions  cannot  be  perpetuated. 
There  will  either  be  a  concession  or  a  revolution.  It  is 
time  for  radicalism,  such  as  resulted  in  freeing  the 
slaves  of  the  South.  The  toleration  of  slavery  for  so 
long  a  time  after  the  public  conscience  was  aroused  was 
because  of  ultraconservatism.  But  what  was  the  nom- 
inal slavery  of  4,000,000  blacks  as  compared  to  the 
actual  industrial  slavery  of  85,000,000  people,  mostly 
white?  Governmental  activity  to  meet  rapidly  chang- 
ing conditions — radicalism,  if  the  term  is  preferable — 
is  the  crying  need  of  the  hour.  Governmental  passive- 
ness  means  national  death. 


345 


INDEX 


Absentee  ownership  of  public 
utilities,  evils  of,  134,  135. 

Accidents,  fatal  and  otherwise, 
niunerous  in  comparison  with 
those  of  other  countries,  260- 
262. 

Adams,  Frank  P.,  views  of,  upon 
Federal  Constitution,  36. 

"All  the  traffic  will  bear,"  sense  in 
which  motto  is  applied  by  rail- 
roads, 138. 

Anarchists  of  the  private-car  and 
steam-yacht  brand  mostly  to 
be  feared,  63. 

Andrews,  Prof.  E.  Benjamin,  views 
of,  upon  monopoly,  200. 

Anthracite-coal  supply,  monopoli- 
zation  of,    by   railroad   com- 
Eanies,  254,  255. 
y,  popular,  on  national  sub- 
jects, caused  by  sporadic  local 
excitements,  53-56. 
popular,  in  matter  of  choosing 
members  of  State  Legislature, 
58,  59. 
popular,  return  of,  after  sporadic 
attempts  to  secure  better  gov- 
ernment, 71. 
popular,  as  shown  by  attitude  of 
average    citizen    toward    ex- 
actions of  monopoly,  117,  118. 

Appropriations,  excessive,  for  trans- 
portation of  mails,  168. 

Availability  of  candidates,  what 
usually  constitutes,  88. 


Bank  deposits,  tendency  of,  to  flow 
to  nnancial  centers,  162,  164. 


Bank  deposits,  popular  delusions 

pertaining  to,  205,  207. 
Bank  loans,  remarkable  and  un- 
warranted expansion  of,  211. 
Banks,  control  of,  by  the  Standard 
syndicate,  151,  152. 

solvency  of,  rendered  always 
doubtful  by  stock  speculations, 
207. 

imsafe  methods  of,  in  imder- 
writing  stock  and  bond  issues, 
212. 

Wall  Street,  dangerous  conges- 
tion in,  for  speculative    pur- 
poses, of  the  nation's  money, 
215. 
"Beef  Trust,"  existence  and  ex- 
actions  of,    due    to   discrim- 
inations   by    railroads,    252, 
253. 
Bituminous-coal    supply  is  being 
rapidly  monopolized  by  rail- 
road companies,  255. 
Bossism,    United    States    Senate, 
170, 171 .     (See  Party  Bosses.) 
Bryan,   Hon.  William  J.,   license 
system  proposed  by,  as  remedy 
for  monopoly,  12. 

futility  of  license  system  pro- 
posed by,  12-16. 

efforts  of,  to  effect  reforms,  29. 

license  plan  proposed  by,  for 
trust  evil,  303. 

views  of,  upon  financing  public 
acquisition  and  ownership  of 
utilities,  331. 

views  of,  upon  effect  of  monopoly 
upon  citizenship,  344. 


Ml 


INDEX 


Carnegie,  Andrew,  views  of,  favor- 
able to  municipal  ownership, 
98. 
mentioned  as  friend  of  munici- 
pal ownership,  128. 

Centralization  of  power  in  Federal 
Government,  dangers  arising 
from,  exaggerated,  37. 

Chandler,  Hon.  William  A.,  views 
of,  upon  financing  govern- 
ment ownership,  336. 

Chicago,  instance  of  overcapitali- 
zation of  street  railway  com- 
pany in,  96. 
great  improvement  in  conditions 

of  citizenship  in,  112. 
example   of,    may   profit    other 
communities,  113. 

Clews,  Henry,  views  of,  upon  cost 
of  railroad  construction,  179. 

Coal,  importance  of,  as  freight, 
255.  (See  Anthracite  coal; 
Bituminous  coal.) 

"Community  of  Interest,"  mean- 
ing of,  157,  158,  160. 

Competition,  in  railroad  construc- 
tion and  operation,  a  thing  of 
the  past,  139,  140. 
suppression  of,  in  case  of  con- 
struction of  new  rival  lines, 
140. 
by  water  transportation,  how 
strangled  by  railroads,  238. 

Conservatism,  two  kinds  of,  dis- 
tinguished, 45-48. 

Consolidations,  alarming  progress 
of,  158,  159. 

Constitution,  Federal,  limited  pow- 
ers  of   Congress  under,  with 
respect  to  monopolies,  7-12. 
Federal,    amendment    of,    sug- 
gested for  accomplishment  of 
reforms,  30. 
Federal,  a  cloak  for  plutocracy 
rather   than   a   guarantee   of 
democracy,  36. 
Federal,  gives  sanction  and  pro- 
tection   to    plutocracy,    154, 
156. 


Constitution,  Federal,  powers  un- 
der, ample  for  goverrunental 
acquisition  of  railroads,  303. 
Federal,  reserved  powers  of  gov- 
ernment prior  to,  314,  315. 

Corporation  lawyer,  potent  in- 
fluence of,  for  evil  in  govern- 
ment, 66. 

Dangers  and  discomforts  incident 
to  railway  operation,  260-266. 
(See  Disconiforts.) 
Deceptions,  popular,  resulting  from 
multiplication  and  confusion 
of  issues,  35.     (See  Popular 
Delusions.) 
Delusions.      (See    Popular   Delu- 
sions.) 
Democracy,  better  exemplifications 
of,  in  some  foreign  countries 
than  in  tliis,  70. 
spirit  of,  not  dead  but  dormant, 
73,  74,  76. 
Difficulties,  inclination  of  voters  to 

exaggerate,  27. 
Discomforts     to     passengers     on 
trains,  262-265. 
of  passengers,  in  the  matter  of 

meals  at  proper  hours,  263. 
of  passengers  with  reference  to 
exposure  to  cold,  264,  265. 
Discriminations,  evils  of,  and  ex- 
tent to  which  practiced,  230- 
259. 
formal  statement  with  reference 
to,  bv  Senate   Committee  in 
1886,'  230. 
ruin  to  individuals  a  result  of, 

232. 
against  localities,  233. 
against     particular     classes     of 

goods,  234. 
new  railroad   construction   pre- 
vented by,  235. 
long-  and  short-haul,  provision 
of  Interstate  Commerce  Act, 
how  far  responsible  for,  236. 
against  transportation  by  water, 
a  great  evil,  237. 


348 


INDEX 


Discriminations,  against  indi- 
viduals, evils  of,  described, 
239,  240. 

against  communities  and  towns, 
in  location  of  road,  241. 

extent  to  which  bond-inflation 
and  stock-watering  respon- 
sible for,  242. 

wealth  and  power  of  Standard 
Oil  Company  largely  attrib- 
utable to,  242-251. 

responsible  for  existence  and  ex- 
actions of  "  Beef  Trust,"  252, 
253. 

cause  agitation  for  legislation 
without  proxasion  of  an  ad- 
equate remedy,  257. 

legitimate  distinguished  from 
vicious,  287,  288. 
Dividends,  payment  of,  upon  stock 
representing  no  investment, 
while  improvements  made  a 
basis  of  more  bonds,  202- 
204. 

fraudulent  increase  of,  by  rail- 
road  directorates    for    stock- 
jobbing purposes,  220. 
Dunne,  Mayor  Edw'd   F.,  efforts 
of,  to  effect  reforms,  29. 

Editorial   writers,    cowardice   and 
subserviency  of,  280. 
inconsistency  of,  in  light  of  his- 
torical development,  321. 

Electoral  franchise  not  exercised 
directly  in  choice  of  President, 
153. 

Ely,  Prof.  Richard  T.,  views  of, 
upon  transportation  problem, 
141. 

Eminent  domain,  exercise  of  un- 
limited, subject  to  conditions, 
317,  318. 

Employees,  indifference  of  railroad 
managements  to  health  and 
comfort  of,  270. 
railroad,  would  be  benefited  and 
more  content  under  govern- 
ment OAvnership,  341. 


Equality  before  the  law  denied  in 
its  practical  administration, 
31. 

Evening  Post  (N.  Y.),  views  of, 
upon  unwarranted  expansion 
of  loans,  211. 

Everybody's  Magazine,  quotation 
from,  on  "  Beef  Trust,"  252. 

Extensions  and  new  railroads,  con- 
struction of,  now  monopolized 
by  existing  trunk  lines,  139. 
made  at  expense  of  patrons  and 
concealed  as  operating  ex- 
penses, 202. 

False  meters,  swindling  perpe- 
trated by  means  of,  99,  103. 

Federal  Government,  form  of, 
inimical  to  effective  popular 
rule,  154. 
has  become  a  plutocracy  under 
constitutional  sanction,  154, 
155. 

Finances  under  government  owner- 
ship, question  of,  discussed, 
327-334,  336. 

Financial  disturbances  and  panics 
largely  attributable  to  dis- 
honest railroad  financiering, 
205. 

Financiers,  political  work  of,  done 
quietly,  41. 
in  control  of  monopolies,  politi- 
cally  in    league    with    party 
bosses,  41,  42. 

Folk,  Gov.  Jos.  W.,  efforts  of,  to 
effect  reforms,  29. 

Franchises    constitute    basis    for 
large  bonded  indebtedness  of 
railroads,  301. 
a  security  which  incumbrancers 
hold  at  will  of  people,  301. 

Futility  of  rate  bills,  and  other 
proposed  remetlies.  271-292. 
(See  also  Railroad  Rates.) 

Garfield,  Commissioner  J.  R., 
abortive  efforts  of,  253,  309. 
310. 


349 


INDEX 


Girdner,  Dr.  John  H.,  views  of, 
upon  misuse  of  party  names, 
86. 

views  of,  upon  popular  attitude 
toward  franchises,  119. 

views  of,  with  respect  to  nature 
of  franchises,  119. 
Glasgow,     lessons     of    municipal 

ownership  in,  123. 
Government,  true  function  of,  con- 
sidered, 50,  51. 
Government  ownership  of  steam 
railroads,  proposed  as   effect- 
ive remedy  for  "  trusts,"  16. 

issue  of,  too  great  to  be  frowned 
down,  75. 

cause  of,  stror^  though  some- 
times appearing  weak,  76,  77. 

union  of  reformatory  forces  nec- 
essary to  consummation  of, 
77. 

in  municipalities,  advantages  of, 
117-128. 

in  municipalities,  objections  to, 
considered,  128-133. 

in  municipalities,  unaccountable 
attitude  of  average  citizen  to- 
ward, 117,  118. 

of  water  and  lighting  plants, 
lessons  from,  125,  126. 

in  municipalities,  advantages  of. 
in  matters  of  local  distribution 
of  net  earnings,  127. 

objections  to,  on  score  of  econ- 
omy of  management,  129. 

objections  to,  on  score  of  safety 
of  operating,  130. 

objections  to,  with  reference  to 
equities  of  stockholders,  130. 

objections  to,  that  at  any  rate  we 
are  not  ready,  131. 

objections  to,  on  score  of  "fair 
play,"  132. 

interest  on  bonded  indebtedness 
for,  could  be  half  paid  with 
excessive  appropriations  for 
carrying  mails,  168. 

of  railroads,  bond  issues  imder  a 
stable  basis  for  banking,  208. 


Government  ownership,  securities 
issued  under  a  safeguard 
against  panics,  214. 

eflFect  of,  to  displace  inflated  se- 
curities with  others  more 
stable,  226. 

effect  of,  upon  financial  dealings 
in  Wall  Street,  229. 

in  minds  of  Interstate  Commerce 
Commissioners  as  only  ad- 
equate remedy,  258,  259. 

a  solution  of  all  difficulties  at- 
tending fixing  of  rates,  290- 
292. 

justified  by  facts  and  arguments, 
if  not  by  conclusions,  of  va- 
rious writers,  294,  295,  302. 

justified  by  success  of  experi- 
ments in  other  countries,  296. 

justified  by  failure  of  State  regu- 
lation, 297. 

advocacy  of,  by  politicians  only 
restrained  by  timidity,  311. 

constitutionality,  feasibility,  and 
advantages  of,  shown,  312- 
345. 

objections  to,  answered,  312-345. 

power  and  duty  rest  with  the 
people,  constitutional  sanc- 
tions being  abundant,  312, 
313. 

objections  to,  of  railroad  lawyers 
and  presidents  answered,  316, 
318. 

discussion  of  subject  of  financing, 
327-334,  336. 

railroad  rates  lower  under,  where 
tried,  337,  338. 

power  it  would  give  to  control  in- 
dustrial mono|X)lies  explained, 
338-340. 

strongly  indicated  by  Governor 
LaPollette's  arguments,   340. 

employees  benefited  and  more 
content  under,  341. 

legislation  necessary  to  inaugu- 
rate, outlined,  341,  342. 

ultimately  ine^ntable  to  avert 
revolution,  345. 


350 


INDEX 


Governmental  guarantees  of  profits 

to  public-service  corporations, 

a  perversion  of  functions,  51. 
Griffin,    Albert,    views    of,    upon 

fabricated  or  "hocus-pocus" 

bank  credits,  216. 
Grosscup,  Judge  Peter  S.,  views  of, 

upon   concentration   of  bank 

deposits,  163. 
hint  of  a  remedy  by,  for  monopo- 

hzation  of  wealth,  306. 

Hallock,  Prof.  William,  expert 
testimony  of,  upon  gas  meas- 
urements, 103. 

Hanna,  Hon.  Marcus  A.,  great  in- 
fluence of,  in  Federal  legisla- 
tion, 170. 
views  of,  upon  operations  in  Wall 
Street,  227. 

Harper's  Magazine,  quotations 
from,  upon  nature  of  railroad 
monopoly,  141. 

Harriman,  E.  H.,  gratification  of 
ambitions  of,  at  expense  of 
public,  193. 

Hearst,  Hon.  William  Randolph, 
efforts  of,  to  effect  reforms, 
29. 

Hepburn  Committee,  findings  of, 
with  reference  to  discrimina- 
tions against  individuals,  240. 

Hull,  important  lessons  from  mu- 
nicipal ownership  in,  124. 

Improved  values  as  argiunent  for 
private  ownership,  132,  133. 

Industrial  Commission,  report  of, 
showing  increase  of  rates  for 
transportation,  196. 

Insurance  companies,  directorates 
of,  contain  names  of  trans- 
portation magnates,  163. 

Insurance  frauds  are  merely  sur- 
face indications  of  much 
greater  malversations,  33. 

Insurance  of  profit  to  public-ser- 
vice corporations  a  vicious 
form  of  paternalism,  322. 


Insurers  of  profits  upon  railroad 
enterprises,  people  placed  in 
relation  of.  Preface,  203,  204. 
(See  Insurance.) 

Interstate  Commerce  Act,  vitality 
of,  destroyed  in  committee, 
167. 

Interstate  Commerce  Commission, 
views    of,    upon    progress    of 
consolidation,  157. 
views  of,  attributing  creation  of 
"trusts"    to    discriminations, 
258. 
already  possesses  all  the  powers 
that   Congress   can   constitu- 
tionally confer,  273-276. 
may  now  make  rates  by  indirect 
method,  284-286. 

JefiFerson,  Thomas,  misconstruc- 
tion of,  views  of,  44,  45. 

Junketing  trips  at  public  expense, 
as  evidence  of  official  prof- 
ligacy, 38,  39. 

Kansas,  misdirected  eflForts  of 
people  of,  in  fight  against 
monopoly,  56,  57. 

"  Kingdom  of  High  Finance, "  term 
here  invented  to  describe  a 
system  stronger  than  govern- 
ments, 149. 

LaFollette,  Hon.  R.  M.,  efforts  of, 
to  effect  reforms,  29. 

views  of,  upon  suppression  of 
competition,  157. 

views  of,  as  to  basis  of  railroad 
rates,  188. 

views  of,  upon  railway  monopoly, 
251. 

inconsistencies  of,  251. 

vivid  portrayal  by,  of  evils 
of  present  railway  control, 
279. 

advocacy  by,  of  increased  gov- 
ernmental activity,  294. 

opinion  of,  as  to  extent  of  gov- 
ernmental power,  314. 


351 


INDEX 


LaFollette,  Hon.  R.  M.,  arguments 
of,  for  governmental  acti^^ty, 
more  strongly  suggest  govern- 
ment ownership,  340. 
Larrabee,  ex-Governor  William, 
quotation  from  work  of , en  titled 
"The  Railroad  Question,"  239. 

advocacy  by,  of  Federal  and 
State  regulation,  294. 

restrained  by  ultraconservatism 
from  advocacy  of  government 
ownership,  295. 

admission  of,  of  futility  of  regu- 
lation through  Federal  Bureau, 
298. 

remedy  proposed  by,  for  chaotic 
railroad  financing,  301. 
Lawson,   Thomas   W.,   views   of, 
upon   Kansans   fight  against 
Standard  Oil,  58. 

statements  by,  relating  to  despo- 
tism of  wealth,  164. 

views  of,  upon  credit  expansion, 
209. 

views  of,  upon  insecurity  of  bank 
deposits,  210. 
Legislation,  anti-trust,  history  of, 
2,  5. 

State,  sanctioning  and  protect- 
ing monopoly,  5,  9. 

secured  corruptly  for  protection 
of  officers  of  insurance  com- 
panies, 33,  34. 

governing  primary  elections, 
fragmentary  character  of,  81- 
84. 

sinister  wording,  and  conceal- 
ments in  phrasing  of,  172,  173. 

vitality  of,  extracted  by  amend- 
ments dictated  by  monopoly, 
167. 

control  of,  by  railroad  corpora- 
tions, 167-177. 

how  affected  by  stock-gambhng 
interests,  224,  225. 

necessary  to  inaugurate  govern- 
ment ownership,  outlined,  341. 
(See  also,  Primary-Election 
Legislation;  Railroad  Rates.) 


Lewis,  George  H.,  views  of,  upon 
relation  of  transportation  to 
modern  life,  142. 
quotation  from  work  of,  entitled 
"National  Consolidation  of 
Railroads,"  241. 
remedy  of  national  consolidation 
proposed  by,  302. 

License,  proposal  of,  as  remedy 
for  "trust"  evil,  303,  304. 

"  License  plan,"  weakness  and  in- 
adequacy of,  304,  305. 

Lloyd,  Henry  Demarest,  quotation 
from  work  of,  29,  51. 
views   of,   upon   aggressions   of 

monopoly,  177. 
reference   to   work   of,    entitled 
"  Wealth    against    Common- 
wealth," 244. 

Loans,  bank,  remarkable  expan- 
sion of,  211. 

Manufactures,  control  of,  by  Stand- 
ard syndicate,  153. 

Mason,  ex-Senator  William  E., 
testimony  of,  as  to  coiu-se  of 
legislation,  169. 

McClure's  Magazine,  quotation 
from,  upon  subject  of  bank 
deposits,  162. 

Monett,  ex- Atty. -General,  views 
of,  referring  to  the  Standard 
Oil  monopoly  in  Kansas,  18, 
19. 

Monopolies  may  be  created   and 

maintained   without   limit   or 

hindrance,  under  State  laws, 

6,9,12. 

furm'shing  public  service  in  cities, 

abuses  by,  85-116. 
national,  railroads  are,  137-143. 
industrial,    railroad   discrimina- 
tions largely  responsible  for, 
251. 

Monopoly,    how    it    may    legally 
exist,  1. 
rule   of   public    policy   against, 
when  based  upon  resbictive 
agreement,  1. 


352 


INDEX 


Monopoly,  no  legal  remedy  against, 
wnen  created  by  forming  cor- 
poration, 5-12. 
has  gone  far  toward  destruction 
of  individual  opportunity,  24. 
that   held    and    exercised   over 
transportation  the  most  to  be 
feared,  27. 
held    by    railroads,    makes    all 
other     monopolies     possible, 
144. 
Moody,  Hon.  W.  S.,  evasions  by, 
with  reference  to  legal  status 
of  monopolies,  3. 
oflBcial  interview  of,  upon  "  Beef- 
Trust"  decision,  3. 
opinion    of,    upon    rate-making 
powers  of  Congress,  284. 
Morton,  Paul,   notice   of  flagrant 
violations  of  law  by,  and  of 
his  discriminations  in  award- 
ing government  contracts,  31. 
views  of,  upon  railway  rates,  199. 
Municipal  Ownership.     (See  Gov- 
ernment Ownership,  Private 
Ownership.) 

National  Consolidation  as  a  rem- 
edy for  railroad  abuses,  futility 
of,  302. 

National  wealth,  unreliability  of 
estimates  of,  210. 

Net  earnings  of  railroads,  remark- 
able increase  in,  as  proof  of 
exorbitant  rates,  186. 

New  Jersey,  the  leader  among  the 
States  in  enacting  laws  for  the 
protection  of  "trusts"  and 
other  forms  of  monopoly,  5,  6. 

New  York  City  official  abuse  and 
corruption  in,  with  reference 
to  subways,  97. 
extortion  of  gas  companies  in, 
through  overcapitalization, 
etc.,  97. 
extortion    in    telephone    service 

in,  98. 
exposure  of  false-meter  swindle 
m,  102,  103. 


New  York  City,  great  populations 
and  property  interests  centered 
in,  103-105. 

revelations  await  the  inquisitive 
with  reference  to,  106. 

poor  street-car  accommodations, 
poisonous  gas,  and  extortionate 
telephone  service  in,  106-108. 

dishonestly  high  rates  for  all 
pubhc  services  in,  106-108. 

how  a  peep  ahead  should  influ- 
ence public  opinion  as  to,  125. 
Newlands,  Hon.  Frank  G.,  ad- 
vocacy by,  of  national  incorpo- 
ration, 306. 
Nicholas,  H.  C,  views  of,  upon 
consolidation  and  influence  of 
capital,  156. 

statement  by,  of  matters  to  be 
considered  in  fixing  and  reg- 
ulating rates,  291,  292. 

views  of,  upon  country's  wealth 
and  future,  332. 
North    American    Company,  vast 
purposes   and   operations   of, 
toward  consolidation,  114. 

objects  of,  political  as  well  as 
financial,  115,  116. 

Objections,  on  score  of  direct 
supervision  being  necessary, 
134,  135. 

of  railroad  lawyers  and  presi- 
dents, to  government  owTier- 
ship  answered,  316,  318. 

that  government  may  not  en- 
gage in  transportation,  an- 
swered, 319. 

of  corporation  and  trust  lawyers 
found  ready  to  meet  all  propo- 
sitions for  a  change,  regard- 
less of  merit,  324. 
OflBcial  corruption,  private  monop- 
oly as  source  of,  122. 
OflScial  duty  ignored,  in  conflict 
with  private  interests,  37-39. 

subordinated  to  interest  of  rail- 
roads in  matter  of  Isthmian 
railroad,  207,  208. 


353 


INDEX 


Overcapitalization  as  a  pretext  and 
basis  for  high  rates,  95-98. 

definition  of,  178. 

purposes  and  effect  of,  178- 
204. 

general  showing  of,  based  upon 
reports  of  Interstate  Com- 
merce Commission,   180-182. 

pertains  to  internal  manage- 
ment and  control,  310. 

cannot   be   made   a   subject   of 
Federal  interference,  310. 
Ownership.   (See  Government  Ow- 
nership, Private  Ownership.) 

Partisan  allegiance,  folly  of  con- 
tinuity of,  27. 

an  obstacle  to  any  genuine  re- 
form, 35. 

views  on,  78-84. 
Party  Bosses,  partnership  between, 
and  monopoly,  29-52. 

control  of  United  States  Senate 
by,  39. 

misdeeds  of,  minimized  in  pop- 
ular estimation  by  exaggera- 
tion and  publicity,  40. 

how  manhood  and  citizenship 
are  minimized  by,  42. 

how  candidates  are  tangled  with 
pledges  by,  43. 

are  in  turn  bossed  by  corporate 
agents,  65,  66. 

not  a  natural  product  of  our  in- 
stitutions, 72. 

overthrow  of,  how  to  accom- 
plish, 78-84. 

overthrow  of,  necessary  prior  to 
any  other  reformatory  success, 
78. 

division  of  voters,  and  pillage  by, 
85. 
Party  candidates,  sale  of  honor  by, 
upon  acceptance  of  nomina- 
tions, 43. 
Party  issues   usually  are  delusive 

and  inconsequential,  19-23. 
Party  leaders,  evasions  by,  of  true 
conditions  and  real  evils,  25. 


Party  membership,  existence  of 
such  relation,  in  any  legal 
sense  denied,  44. 

Party  pledges  ignored  with  im- 
punity in  modern  practice, 
67. 

Paternalism,  objection  based  upon 
dread  of,  answered,  320,  321. 
relation  of  people  to  public-ser- 
vice corporations  in  private 
hands,  a  most  vicious  form  of, 
322. 
all  fimctions  of  goveriunent  par- 
take of  character  of,  323. 

Patterson,  Hon.  Thomas  M.,  views 
of,  upon  importance  of  trans- 
portation problem,  142. 
answer  of,  to  cry  of  socialism, 
321. 

Pennsylvania,  political  corruption 
in,  subversive  of  popular  gov- 
ernment, 61. 

Philadelphia,  result  of  popular  up- 
rising in.  110. 
corruption  with  reference  to  lease 

of  lighting  plant  in,  110. 
as  an  object  lesson  in  blind  un- 
reasoning partisanship.  111. 

Pierce,  Daniel  T.,  statistical  in- 
formation given  by,  upon  rail- 
way accidents,  261 . 

Political  interference  by  railroad 
corporations  and  combina- 
tions, 167-177. 

Political  parties,  use  of  names  of, 
to  divide  and  mislead  voters  at 
municipal  elections,  85-87, 
89. 

Political  power,  objection  based 
upon  fear  of  centralization  of, 
answered,  325,  326. 

Pooling  and  "gentlemen's"  agree- 
ments beyond  reach  of  legal 
remedies,  2. 

Popular  delusions,  vnth  respect  to 
"trusts"  and  monopolies,  1- 
27. 
created  by  misinformation  given 
publicity,  17-19. 


354 


INDEX 


Popular  delusions,  at  municipal 
elections,  as  to  bearing  upon 
party  interests,  59. 

with  respect  to  privilege  accorded 
voters  at  elections,  64,  65. 

with  respect  to  distribution  of 
financial  gains,  69. 

with  reference  to  money  on  de- 
posit in  banks,  205-207. 

herein  of  acceptance  of  views  of 
leading  financiers,  213. 

with  reference  to  powers  of  Inter- 
state Commerce  Commission, 
273. 

with  reference  to  provisions  of 
Interstate  Commerce  Act,  273. 

with  reference  to  large  imder- 
takings,  334. 

that  we  lead  tlie  world  in  matter 

of  railroad  management,  338. 

Popular  indifference  to  impositions 

of  monopoly,  201. 
Popular  will,  defeat  of,  by  execu- 
tive usurpation,  60. 
Post  Office  Department,  a  refuta- 
tion of  objection  based  upon 
political  centralization,  326. 
Primary-election  legislation,  that  of 
California  the  first   effectual, 
79,  80. 

absvu-d  view  of  California  courts 
with  reference  to,  80. 

opposition  of  party  bosses  to 
enforcement  of,  80. 

movements  in  various  States  to 
secure,  83,  84. 

proper,  may  enable  people  to  con- 
trol election  of  United  States 
senators  without  amending 
Constitution,  154. 
Private  ownership  of  railroads, 
evils  and  dangers  of,  137-166. 

incompatible  with  government 
control  of  rates,  300. 

imposes  a  condition,  of  servitude 

upon  all    classes,   345.     (See 

also  Government  Ownership.) 

Profit,  margin  of,  fixetl  by  owner 

of  transportation,  141. 


Profits,  guarantee  of,  to  pubhc- 
service  corporations  a  perver- 
sion of  governmental  func- 
tions, 51. 

Profit-sharing,  as  a  remedy  for 
monopoly,  306,  307. 

Public,  quotation  from,  upon  divi- 
sions in  ranks  of  reformers,  35. 

Pubhc  interests  often  sacrificed  be- 
cause of  jealousies  and  con- 
flicts between  partisans,  68. 

Public    Opinion,    quotation  from, 
on  subject  of  concentration  of 
wealth,  156. 
quotation  from,   on  subject  of 

railway  accidents,  262. 
quotation   from,    on   prevalence 

of  railway  accidents,  291. 
quotation     from,     on     "license 

plan,"  304,  305. 
quotation   from,   upon   nation's 
wealth  and  future,  332. 

Public  Ownership.  (See  Govern- 
ment Ownership.) 

Pubhc  service,  local  interest  in  dis- 
tribution of  net  earnings  of, 
127. 

Publicity  compulsory,  hardly  worth 
considering  as  a  remedy,  308, 
309. 

Radicalism  is  tlie  live,  moving,  and 
conquering  force  of  the  age,  47. 
Radicals,  those  so  designated,  ac- 
complish results,  47. 
Railroad   charges   are  a  form   of 

taxation,  231. 
Railroad    construction,    enormous 
frauds  inherent  in,  183,  184. 
reduction  in  cost  of,  178-180. 
Railroad  rates,  extortions  in  matter 
of,  32. 
unreasonably  high  under  private 

ownership,  178-204. 
exorbitant,  as  shown  by  aggre- 
gate of  net  earnings,  186. 
great    increase    of,    shown    by 
report  of  Industrial  Commis- 
sion, 196. 


355 


INDEX 


Railroad  rates,  cost  of  living  in- 
creased by  raise  of,  197. 

concealment  of,  in  process  of 
consumption,  199. 

decrease  of,  delusive,  255. 

upon  coal,  increase  of,  during 
recent  years,  255,  256. 

rule  against  reduction  of,  to 
confiscatory  point,  283. 

difficulties  in  the  way  of  com- 
mission fixing,  286-292. 

many  elements  enter  into  fixing 
of,  289-292. 

difficulties  in  way  of  regulation 
of,  under  private  ownership, 
289-292. 

are  basis  of  railroad  financiering, 
290. 

reasonable,  or  unreasonable, 
matter  for  Federal  courts, 
299. 

lower,  where  government  owner- 
ship tried,  337. 
Rate-fixing,    acceptance    of    false 

standards  for,  91-95. 
Reed,  ex-Speaker  Thomas  B., 
views  of,  upon  "  Publicity  "  as 
a  remedy,  311. 
Remedies,  none  against  "  trusts  " 
without  constitutional  amend- 
ment, or  government  owner- 
ship of  transportation,  4. 

radical,  recommended,  23. 

discussion  of,  271-292. 

views  of  others  as  to,  293-311. 

other,  than  that  of  government 
ownership  aimed  at  mere  in- 
cidents, or  misconceived,  311. 
Remedy,  effective,  postponed  by 
consideration  of  makeshifts, 
271-292. 
Rockefeller,  John  D.,  wealth  and 
power  of,  in  financial  world, 
148,  149. 

patience,  endurance,  and  fore- 
sight of,  247. 
Roosevelt,     President     Theodore, 
efi'orts  of,  to   effect    reforms, 
29. 


Roosevelt,  President  Theodore, 
opinion  of,  that  railroad  con- 
trol is  a  proper  subject  for 
Federal  Government,  298. 

Russell,  E.  F.,  reference  to  account 
given  by,  of  "Beef  Trust," 
253. 

Safety  appliances,  neglect  of  Amer- 
ican railway  managements  to 
provide,  260,  261. 

Salaries  of  railroad  officials  and 
their  dependents,  a  burden 
upon  public,  198. 

San  Francisco,  remarkable  pillage 
of,  and  unaccountable  toler- 
ance of  abuses  by,  citizens  of, 
91-95. 
overcapitalization  by  monop- 
olies in,  as  pretext  for  high 
rates,  95-98. 
exposure  of  false-meter  swindle 
in,  100,  101. 

Saturday  Evening  Post,  quotation 
from,  referring  to  rights  of 
railroads,  188. 

Senate.  (See  United  States  Senate.) 

Sherman   Anti-trust   Act,  no  sub- 
jects existent  against  which  its 
provisions  can  be  invoked,  2, 3. 
nonenforcement      of      criminal 
clauses  of,  281,  282. 

Social  disorder  and  national  dan- 
ger, attend  continuance  of 
private  ownership,  267-270. 

Socialism,  insane  terror  of  people  at 
mention  of  danger  of,  62. 
how   unreasoning   prejudice 
against,   used  by  bosses  and 
partisans,  136. 

Sovereignty,  ownership  of  means 
of  transportation  an  attri- 
bute of,  140. 
exercise  of,  by  railroads  in  con- 
nection witn  special  privileges, 
281. 

Standard  Oil  Company,  immense 
income,  and  magnitude  of 
operations  of,  144,  145. 


356 


INDEX 


Standard  Oil  Company,  distin- 
guished from  "Standard,"  the 
syndicate,  145. 

wealth  and  power  of,  due  largely 
to  discriminations,  242-251. 

extent  of  monopoly  enjoyed  by, 
251. 
Standard  syndicate  described  and 
distinguished   from   Standard 
Oil  Company,  145-153. 

other  names  by  which  known  and 
designated,  145-153. 

immensity  of  financial  power 
and  influence  of,  145-166. 

influence  of,  in  elections  for 
United  States  senators,  152. 

extent  of  control  of  transporta- 
tion by,  158,  159. 

welfare  of  all  the  people  and 
the  Government  menaced  by 
power  of,  160-166. 

how  represented,  and  power  of, 
in  United  States  Senate,  171. 
State  sovereignty,  false  views  of, 

50. 
States'    rights,    objections    based 

upon,  answered,  323-325. 
SteflPens,    L.    S.,    views   of,    upon 
domination  of  boss  influences, 
_72. 

views  of,  with  reference  to 
political  corruption  in  Phila- 
delphia, 111. 
Stickney,  A.  T.,  views  of,  upon 
transportation  problem,  141. 
Stocks  and  bonds  of  railroads,  are 
basis  for  most  important  finan- 
cial operations,  166. 

watered  and  inflated,  184-204. 

fraudulent  purpose  behind  water- 
ing and  inflation  of,  184-204. 

watering  and  inflation  of,  to 
conceal  high  rates,  190-204. 

of  railroads,  whole  country  in- 
juriously affected  by  specula- 
tion in,  207. 

expansion  of  credit  based  upon, 
endangers  the  solvency  of  all 
Wall  Street  banks,  207. 


Stocks  and  bonds  of  railroads, 
watered  and  inflated  to  secure 
fluctuation  of  prices  in  the 
market,  217. 

Stock  gambling,  how  carried  on, 
and  results  of,  218. 
those  engaged  in,  of  no  use  to 

community,  222. 
flooding  and  draining  the  market 
through,  by  inside  manage- 
ment of  railroads,  222. 
influence  of,  upon  characters 
and  conduct  of  United  States 
senators,  224. 

Stockholders  in  public-service  cor- 
porations, rights  and  equities 
of,  considered,  335. 

Stock  speculations,  enormous  ex- 
pense involved  in  conducting, 
227. 
upon  margin,  seductive  charac- 
ter and  dangers  of,  228. 
evils  of,  largely  traceable  to  dis- 
honest railroad  financiering, 
211. 

Stock- watering  not  an  evil  remedi- 
able by  Federal  legislation, 
14. 
remarkable  instance  of,  in  case 
of  San  Francisco  monopolies, 
91-95. 
in  case  of  public-service  corpora- 
tions, no  honest  motive  be- 
hind, 98. 

Stokes,  J.  G.  Phelps,  advocate  of 
municipal  ownership,  128. 

Strikes,  railroad,  calamities  that 
may  result  from,  267,  268. 

Subway,  enormous  wrong  to  public 
in  construction  and  lease  of, 
109. 

Taft,  Hon.  William  H.,  expressions 

of  administration  policies  by, 

173. 
Taxation,   imposition  and   colleo- 

tion  of  rates,  a  form  of,  192. 
railroad    charges     a    form    of, 

231. 


357 


INDEX 


Terminal  facilities,  importance  of, 
as  buttressing  railroad  monop- 
oly, 138. 
Territorial  dimensions,  magnitude 
of,  an   obstacle  to   concerted 
political  action,  53-56. 
Tarn  Watson's    Magazirie,  quota- 
tions from,  36,  86,  119. 
Transportation,  a  necessity  of  life 
in   modern   civilization,    137- 
142. 

how  improved  facilities  for, 
supersede  prior  means  of,  138. 

by  rail,  necessary  to  exercising 
functions  of  Federal  Govern- 
ment, 144. 

control  of,  by  Standard  syndi- 
cate, 151-152. 

of  mails,  made  pretext  for  ex- 
travagant appropriations,  168. 

of  mails,  enormous  reduction  in 
cost  of,  under  government 
ownership,  168. 

decreased  cost  of,  caused  by  im- 
proved mechanisms,  198. 

problem  of,  concerns  all  classes 
and  avocations,  343-345. 
Transportation  by  water,  loss  to 
people  by  destruction  of,  236, 
237. 

congressional  appropriations  to 
promote,  lost  to  public,  238. 
"Trust,"  no  monopolies  in  form 

of,  at  present,  3. 
"Trusts"     industrial,     dependent 
upon    transportation       trust, 
165. 


"Trusts"  industrial,  can  be  sup- 
pressed or  controlled  by  gov- 
ernment ownership  of  trans- 
portation only,  338. 

United   States   Senate  dominated 

by  political  bosses,  39. 
views  of  an  ex-senator  pertaining 

to,  169. 
character  of,  as  a  deliberative 

body,  169. 
domination  of,  by  Standard  Oil 

and    Wall    Street    influences, 

171,  172. 
reception  by,  of  newly  elected 

senators,  175. 
United  States  senators,  presence  of, 

in  the  stock  market,  224,  225. 
United    States    Steel  Corporation, 

fraud  of,  in  unloading  stocks 

upon  employees,  307. 

Ventilation     of     passenger     cars, 

defectiveness  of,  262. 
"Vested  Rights,"  a  term  often  used 

in  an  erroneous  and  perverted 

sense,  51,  52. 

Wall  Street  Journal,  quotation 
from,  upon  relation  of  con- 
centrated wealth  to  govern- 
ment, 156. 

Wells,  David  A.,  views  of,  on  sub- 
ject of  overcapitalization,  178. 

Wilson  Tariff  Bill,  .scanda'  dur- 
ing pendency  of,  in  Seriate, 
226. 


0) 


358 


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